Drugs: Cocaine

Baroness Hooper: asked Her Majesty's Government:
	What part they intend to play in the Government of Colombia's shared responsibility initiative to pursue international solutions to the global cocaine problem.

Lord Triesman: My Lords, the United Kingdom actively supports the work done by the Colombian authorities on counter-narcotics. We welcome the Colombian Government's shared responsibility initiative and are keen to play our part with other European partners. We encourage all key stakeholders to work together to co-ordinate and strengthen efforts in the fight against illicit drugs, whether they are producer or consumer societies.

Baroness Hooper: My Lords, I thank the Minister for his constructive reply and in particular for emphasising the fact that we as a consumer society have a role to play in supporting the heroic efforts of Colombia to control its production of this drug. Can he give us a little more detail about the next step following on from the summit held last November? How are these activities to be monitored and how do we intend to learn from each other's experience?

Lord Triesman: My Lords, we and the Colombians have rightly emphasised not just the supply side but the demand side for this drug. On the supply side, we will continue to work on specific programmes to intercept and interrupt this trade. That work is showing signs of success in seizures and disrupting finance flows. On the demand side, a major education programme costing around £64 million is taking place with young people. Unless we can get people to understand the consequences of cocaine use, and if they have among those they look up to what appear to be appealing role models who use cocaine, we will never square the circle.

Viscount Montgomery of Alamein: My Lords, does the Minister agree that one of the factors that will assist in the work he is planning, particularly on the supply side, is the extraordinary economic recovery of the country under President Uribe?

Lord Triesman: My Lords, it is true that the economy of the country is doing very much better, but we also have to acknowledge that large parts of the country are, at the moment, beyond the complete reach of the Government. Forces consisting of a mixture of political figures and narcotics criminals often make it very hard for the Government's reach to be as full as it should be. But the alternative sourcesof economic activity give grounds for real hope of progress, and I believe we are seeing a good deal of that progress.

Baroness Tonge: My Lords, does the Minister accept that the demand side in the West is not only from the crack addicts on sink estates that we hearso much about but also from smart young 30-somethings in the City and at dinner parties all over the country who take cocaine for recreational use and do not necessarily get addicted? When will the Government run an advertising campaign to inform those smart young things? Will they consider taking such people on a visit, as I have made, to the countryside in Colombia to see the misery, disease, destruction, torture and death suffered by innocent Colombians just to satisfy their pleasure?

Lord Triesman: My Lords, it is true, as the noble Baroness has just reminded us, that the use of cocaine spreads through many groups in society. One of the great advantages of the shared responsibility campaign is that it is targeted at exactly that kind of wealthy, recreational use. I understand that on New Year's Day, for example, advertisements directed at exactly that group were broadcast on 77 occasions to illustrate the fact that they may feel this is a recreational pleasure but the cost in human misery back in Colombia, Peru, Venezuela and Ecuador is absolutely intolerable.

Lord Selsdon: My Lords, how actively involved are Colombian drug interests in Afghanistan?

Lord Triesman: My Lords, we have no evidence of interests of that kind. It may be that a very different drug is being produced and that the supply chains are still quite distinct.

Lord Wallace of Saltaire: My Lords, given the enormous damage done to Colombia and someof its neighbours by the overconcentration of the Americans on the supply side, as opposed to the demand side, over the past 20 years, is it not time to put a much stronger focus on the demand side and to allow the poor and extremely disordered countries of Latin America to sort out their own domestic problems with a little less external interference?

Lord Triesman: My Lords, I can tell the House that the demand from the Colombian Government and some other regional governments—including, with regard to policing narcotics, the Venezuelans—for our help on the supply side is in the front of their minds. Of course it is right that we should act on the demand side. We have a responsibility for that. We have to try, however, as does the United States, to disrupt the supply and financing of this drug and the routes along which it travels. This drug corrupts the political system of every country, province or town that it touches. All the work has to be done.

Lord Marlesford: My Lords, while I fully support anything that can be done to discourage people from taking drugs, does the Minister think that sooner or later Governments are going to have to recognise that making drugs illegal has been no more effective than prohibition was in the United States? All it does is feed crime throughout the world.

Lord Triesman: My Lords, I come to this from a position 180 degrees away from that of the noble Lord. I am not at all tolerant of the idea that we can have so libertarian a system that people who peddle death—because that is what it is—should be able to do so with impunity from the law.

Lord Avebury: My Lords, what contribution do UK-registered companies make to the solution of the drugs problem in Colombia? Are there not very large investors in mining and oil interests in Colombia, and do they not have a responsibility to try to help the Colombians?

Lord Triesman: My Lords, the existence of a good deal of inward investment into Colombia is exactly what has stimulated the economy, as the noble Viscount, Lord Montgomery, said, and that has provided some real alternatives. When I was last in Colombia seeing some of the counter-drugs work, just before the General Assembly of the United Nations, I made a point of also meeting the leaders of those businesses to talk about these problems, as well as humanitarian problems and other areas whereI believe companies have a social responsibility alongside their economic responsibilities. I think they are very sensitive to that. They want to see the development of a viable economy in which people's use of drugs as a means of sustaining any livelihood becomes smaller and moves towards eradication.

Health: MRSA

Baroness Masham of Ilton: asked Her Majesty's Government:
	What research and monitoring are being undertaken on the Panton-Valentine leukocidin form of methicillin resistant staphylococcus aureus (Community Associated—CA—MRSA).

Lord Hunt of Kings Heath: My Lords, monitoring is undertaken by the Health Protection Agency. The Staphylococcus Reference Laboratory tests suspected community MRSA isolates, in addition to those from patients with suspected PVL-related disease. We are about to commission a project to investigate the prevalence of community-associated MRSA, which will also look for PVL. In addition, we have asked the HPA to revise the guidance for the diagnosis and management of serious PVL infections.

Baroness Masham of Ilton: My Lords, I thank the Minister for that helpful reply. Why does Scotland have surveillance for this form of a very dangerous and deadly toxin that kills off white blood cells? Is he aware of the deaths of a young 18 year-old marine on exercise in Devon, health workers in Staffordshire and babies in Norfolk?

Lord Hunt of Kings Heath: My Lords, the noble Baroness is right to point out the virulence of this strain and that, sadly, a number of people have died as a result. My understanding is that the position in Scotland is not as she suggests. All MRSA cases from hospitalised patients in Scotland are referred to the Scottish MRSA laboratory, but these are tested for PVL only on request. There is no system for routinely testing sensitive strains for PVL. So I think that the position in Scotland is rather more consistent with the English position than the noble Baroness suggests.

Baroness Cumberlege: My Lords, according tothe European Antimicrobial Resistance Surveillance System, most of Europe is managing MRSA better than we are. Does the Minister not think it shameful that we are rated alongside Greece and just above Portugal, Malta and Cyprus? Does he agree with Professor Gemmell, an expert in this field, that we need lower bed occupancy rates and a higher ratio of staff to patients? That is contrary to the current trends exacerbated by the Government's targets for bed occupancy and financial policy, which is leading to redundancies.

Lord Hunt of Kings Heath: My Lords, the noble Baroness asks a series of questions. The Government are by no means complacent about the current levels of MRSA in the health service. That is why a very challenging target has been set. We are seeing improvements; there is some way to go. We have made it clear to the NHS that this must be treated as a high priority.
	We need to remember that targets exist in order to reduce the waiting time for treatment. I remind the noble Baroness that when she left office as a Health Minister, waits of 18 months or longer were not uncommon. This Government have reduced waiting times to six months and they will go down further in the future. That is what the public want.

Lord Campbell-Savours: My Lords, is there not a linkage between bed occupancy and MRSA?

Lord Hunt of Kings Heath: My Lords, there is no question but that very high bed occupancy presents some challenges in relation to MRSA. Equally, we know that a number of hospitals with high occupancy rates are getting their MRSA rates down. The guidance to the health service makes it clear that infection control teams and bed managers must work closely together and do everything they can to eradicate the problem.

Baroness Neuberger: My Lords, given the rise of MRSA in all its forms and Clostridium difficile, what specific steps are the Government taking to shift the prescribing of antibiotics away from broad spectrum antibiotics towards narrower spectrum, given the apparent link between high levels of antibiotic use and particularly high levels of hospital-acquired infections?

Lord Hunt of Kings Heath: My Lords, the noble Baroness is right to suggest that it is essential to have effective policies on the use of antibiotics. It is worth making the point that for many vulnerable patients, antibiotics remain a very important medication. As for the guidance given to the health service, the statutory code of practice requires trusts to have policies on antimicrobial prescribing. We expect trusts to strengthen their performance in this area along the lines suggested by the noble Baroness.

Lord Forsyth of Drumlean: My Lords, I am not making a point against the Government, because I was, and remain, an enthusiastic supporter of competitive tendering in the health service. But is it not obvious that competitive tendering for the cleaning of hospital services has been used exclusively to drive down costs and not improve quality? Should we not look at the tendering process with a view to improving the quality of cleaning, which is central to preventing the spread of this disease which affects a number of people going into our hospitals? I am delighted to see the noble Baroness, Lady David, in her place today.

Lord Hunt of Kings Heath: My Lords, heaven rejoices as a sinner repenteth. Having looked at the question and the comparison between cleaning services operated in-house as opposed to those in the private sector, I have not seen any hard evidence to suggest that that makes a difference. What does make a difference is the quality, either of the management of the directly run service or of the contract with the private sector. It is essential that matrons, senior nurses and ward sisters have sufficient control over the cleaning team to ensure that they are fully part of the patient process.

Lord Foulkes of Cumnock: My Lords, is my noble friend aware that when Andy Kerr, the Scottish Health Minister, recently launched an important initiative on proper hand-washing, he was ridiculed in some sections of the Scottish press? Will my noble friend reaffirm that important hygiene methods such as proper hand-washing are absolutely vital in controlling this kind of infection?

Lord Hunt of Kings Heath: My Lords, I am sorry to hear that a Minister should be ridiculed for encouraging cleanliness and hand-washing; it is essential. The National Patient Safety Agency has a programme to which all trusts are signed up. Every encouragement must be given to staff, patients and visitors regarding hand-washing. The Healthcare Commission will follow this up with unannounced inspections. One of the issues it will be looking at is whether individual trusts have a vigorous hand-washing policy.

Northern Ireland: Devolution

Lord Rogan: asked Her Majesty's Government:
	What issues remain to be settled before an Executive can be formed in Northern Ireland following the elections on 7 March.

Lord Rooker: My Lords, there is much work still to be done, but there are no issues before us which should prevent the successful restoration of devolved government on Monday 26 March. The fact that so much progress has already been made is testament to the commitment of the Northern Ireland political parties to achieving a final political settlement.

Lord Rogan: My Lords, I thank the noble Lord for his Answer. The Taoiseach of the Irish Republicis reported in the Irish Times as saying that thePrime Minister assured him, based on Mr Blair's conversation with Mr Paisley, that the Democratic Unionist Party would form a power-sharing government with Sinn Fein/IRA on 24 March. Does the Minister agree with me that the Government cannot put the people of Northern Ireland through an election based on a wing and a prayer? Surely the Government must get this issue publicly clarified right away.

Lord Rooker: My Lords, to be honest, I do not have a clue what the noble Lord is talking about. There are no issues before us which should prevent the successful restoration of devolved government on 26, not 24, March. An election to the devolved Assembly will take place on 7 March. That election process is already under way in Northern Ireland. It is probably best that it is not under way in this Chamber.

Lord Glentoran: My Lords, I entirely agree with what the Minister has said. However, there is now a certain lack of clarity. Are we to believe and understand that Sinn Fein and the DUP have agreed to sit down together as an Executive after the election?

Lord Rooker: My Lords, an election will take place on 7 March. The legislation has been approved and passed by this Parliament. Only after that election, once the composition of the parties is known, will it be clear which party will have the right to nominate the First Minister and the Deputy First Minister. There are more than two parties in Northern Ireland contesting the election. Why should we prejudge it? There are no impediments to devolved government in Northern Ireland. No new hurdles will be put in the way by the Government, and they should not be put in the way by anybody else. The commitments that have been made to policing by Sinn Fein recently have removed the final hurdle—if there was a hurdle—to devolved government and power sharing.

Lord Smith of Clifton: My Lords, does the Minister agree with me that the ball is now very much in the DUP's court, given the recent development of Sinn Fein joining the Policing Board and encouraging the Police Service of Northern Ireland? In that DUP posture, is the trouble coming from elements inthe DUP—the "Real DUP" or the "Continuity DUP"—or is it coming from the generalised posture of the DUP on the issue?

Lord Rooker: My Lords, I am not walking into that. I understand where the noble Lord's question is coming from. The fact of the matter is that an election is under way. Everyone knows what the rules are. They are crystal clear in the legislation. The Government want devolved government. I think Parliament wants devolved government. It is a voluntary process, though. This House, the other place and the Government cannot force the political parties into devolved government. It is a voluntary process, but it will be done on a power-sharing basis or not at all.

Baroness Park of Monmouth: My Lords, does the Minister agree, however, that there is one thing that Sinn Fein can and should be required to do bythis Government before devolution: to allow the McCartney trial to take place, so that it can clearly be seen in Northern Ireland that Sinn Fein is not only committed to going into the police and probably hoping to run it, but that before that time it makes a clear commitment that the case can go to trial as it has been hanging fire now for two years? The Government now have a duty to require Sinn Fein to do that.

Lord Rooker: My Lords, I understand the reason for the noble Baroness's question, but neither the Government nor anyone else are seeking to impose new hurdles. I have here some of the statementsthat were made following the recent Sinn Fein conference which gave the approval and mandate to the leadership to encourage its members to join the police force, to join the local policing structures, and to report to the police on information relating to crime, rape, car theft and violence. On the McCartney murder, the statement said:
	"Anybody who has any information on the McCartney killing should give it to the police".
	There are no new hurdles to be put in the way of devolved government, and we should not seek to do that.

Lord Dubs: My Lords, many people will believe that both the British and Irish Governments deserve great credit for having taken the process as far as they have. How long after 26 March will the parties have to reach an agreement before we say, "It's no deal"?

Lord Rooker: My Lords, I understand that it is26 March, which consists of 24 hours. That is the day that the parties will be expected to create the First and Deputy First Ministers, take the pledge of office, run the d'Hondt process and form the Executive. The deadline for that is 26 March. As I understand it from the legislation approved by Parliament, if it does not occur on 26 March, nothing will happen for a considerable time.

Lord Trimble: My Lords, the Minister said that the recent statements of Sinn Fein removed the final hurdle, but does he take account of what William McCrea said in another place yesterday in describing the present position of Sinn Fein as "totally unacceptable"? The leader of the DUP may wish to maintain a degree of ambiguity about his position, but is it wise for the Government, as the Minister has indicated, to allow that ambiguity to run right up until 26 March? Is it not desirable that the Government try to achieve some clarity in the matter?

Lord Rooker: No, my Lords. We have an election under way, and now the attempt is to fight it on the Floors of the other place and this place. I am not going to co-operate with that. To the best of my knowledge and all the information and briefing thatI have been given, there are no issues in the waythat require to be resolved before the successful restoration of devolved government on 26 March. The commitments that have been demanded of Sinn Fein relating to the police and support for the courts and the criminal justice system have been met, following its conference. The fact is that Sinn Fein is committed to put those in place, with devolved, shared government. There should be no impediment to that following the elections on 7 March.

Lord Dykes: My Lords, I thank the Minister for his sensible suggestions. Despite what he said, because he sounds a bit pessimistic, is he confident that the DUP will not keep inventing new conditions for Sinn Fein to follow? Otherwise, it will be accused of wrecking the election.

Lord Rooker: My Lords, what I have said is that there are no new conditions, barriers and hurdles that the Government, Parliament or anyone else should put in the way. All the commitments that have been demanded have been met. That is why the election process is now under way. If it they had not been met, we would not be in this process. It now falls to the parties to fight it out, with their mandates, before the people of Northern Ireland on 7 March—it is only four weeks from today, so we do not have long to wait to get some answers.

Turkey Imports

The Countess of Mar: asked Her Majesty's Government:
	Whether any live turkey chicks have been imported from outside the United Kingdom since October 2006; and what are the controls on such imports.

Lord Rooker: My Lords, current records show that 354,745 live turkeys have been imported to the United Kingdom since last October. These included 141,046 day-old chicks from within the EU. Figures for imports into the United Kingdom of live day-old turkey chicks from outside the EU are not currently available. All consignments of live birds are liable to documentary and identity checks. These must come with an official health certificate guaranteeing compliance with European Union rules and freedom from disease.

The Countess of Mar: My Lords, I am grateful to the Minister for that reply. Would he kindly convey to all the officials at Defra and to the local authorities concerned in the Norfolk outbreak my congratulations on the very efficient and effective way in which they dealt with that outbreak?

Noble Lords: Hear, hear!

The Countess of Mar: My Lords, they had clearly done their homework beforehand and got it right, unlike with the foot and mouth disease outbreak.
	In addition to the checks made on these chicks, what checks have been made on the movements of animals, people and vehicles that have travelled between the Bernard Matthews premises in Suffolk and the partnership premises and the infected area in Hungary?

Lord Rooker: My Lords, first, I thank the noble Countess for her appreciation of the work of Defra, which I think was supported by the whole House. A lot of planning has gone into this in terms of exercises over a long period, and the department put into place exactly what was planned.
	An enormous amount of work is going on in the laboratories checking the movements of people, animals, birds and lorry movements between various plants. Indeed, the laboratory still does not know—and will not know until later today—the precise DNA structure of the H5N1 virus in Suffolk and what was discovered in the outbreak in Hungary. Even if they are found out to be the same, there is no proof of transmission. By the way, although I said that about 141,000 day-old chicks had been imported, none of those chicks came from Hungary.

Lord Dixon-Smith: My Lords, I add my thanksto the Minister and the Government for the expedition and effectiveness of the work that they undertook from the time when they were called to this outbreak.
	I have two supplementary questions. First, are the Government satisfied that they were called in soon enough to this outbreak, or would it have been better if they could have been called in earlier? Secondly, this outbreak gives the appearance of being totally under control, for which we should all be extremely thankful. It would be reassuring to know that the State Veterinary Service was testing the other sheds on that particular turkey farm to see whether antibodies are appearing in any of those other buildings. Although we think that the biosecurity is good, these viruses have rather sneaky habits.

Lord Rooker: My Lords, active work is going on in patrols not only on the other sheds in the farm but in the controlled area—the protection zone of three kilometres—and the 10-kilometre surveillance zone. That is the whole purpose of those zones being put in place. Then there are the other issues relating to the ban of bird shows and pigeon racing and—I think from today—on shooting game birds in that zone, because shooting disturbs wild birds. So there is effective work going on and a constant surveillance programme. These controls will remain for sometime, notwithstanding that the sheds have been disinfected; I do not know whether they have all been done. It is a large enterprise because it is a large factory and checks are being made, not only in that factory but in other factories in that three-kilometre zone.

Baroness Miller of Chilthorne Domer: My Lords, from these Benches we add the view that Defra contained the outbreak very well this time.
	Are the checks on the day-old chicks done visually? If not, are some kept back as samples—becausea day-old chick might well be carrying the virusand it might not be apparent? Clearly, the chicksare imported and taken directly to the place where they will grow into adults. Exactly at what stagedoes it become apparent that a batch is free from disease?

Lord Rooker: My Lords, I understand that there are three types of check: a documentary check of the certificate accompanying the consignment; an identity check to ensure that the consignment matches the information on the document; and physical checks on the consignment, including on the temperature and conditions and checks for microbiological and chemical containment. The chick stays day-old only for a day.

Noble Lords: Oh!

Lord Rooker: My Lords, it is more complicated than that. I understand that most of the chicks we import come from France, the Netherlands and Spain. When I said to officials, "They're born one day and they're here the next", the reply was, "It is not quite as simple as that, Minister, because some of them may be born on the way". The chicks go into the system but that does not mean that they are not checked by workers in the factories. I am not saying that they are checked in the same way as they are on the lorries, but there is constant surveillance on large poultry farms. I have seen for myself, not at a turkey farm but at a large broiler farm, that constant checks are made on the birds' health.

Local Authorities (Contracting Out of Anti-social Behaviour Order Functions) (England) Order 2007

Industrial Training Levy (Engineering Construction Industry Training Board) Order 2007

Industrial Training Levy (Construction Industry Training Board) Order 2007

Mental Capacity Act 2005 (Loss of Capacity during Research Project) (England) Regulations 2007

Road Traffic (Northern Ireland) Order 2007

Policing (Miscellaneous Provisions) (Northern Ireland) Order 2007

Pneumoconiosis etc. (Workers' Compensation) (Payment of Claims) (Amendment) Regulations 2007

Guaranteed Minimum Pensions Increase Order 2007

Social Security Benefits Up-rating Order 2007

Smoke-free (Penalties and Discounted Amounts) Regulations 2007

Smoke-free (Exemptions and Vehicles) Regulations 2007

Children and Young Persons (Sale of Tobacco etc.) Order 2007

Baroness Amos: My Lords, I beg to move the Motions standing in my name on the Order Paper.
	Moved, That the orders and regulations be referred to a Grand Committee.—(Baroness Amos.)

On Question, Motion agreed to.

Serious Crime Bill [HL]

Lord Evans of Temple Guiting: My Lords, I beg to move the Motion standing on the Order Paper in the name of my noble friend Lady Scotland of Asthal.
	Moved, That it be an instruction to the Committee of the Whole House to which the Serious Crime Bill [HL] has been committed that they consider the Bill in the following order:
	Clauses 1 to 4,
	Schedule 1,Clauses 5 to 35,Schedule 2,Clauses 36 to 44,Schedule 3,Clauses 45 to 48,Schedule 4,Clauses 49 to 56,Schedule 5,Clauses 57 to 65,Schedule 6,Clause 66,Schedules 7 and 8,Clauses 67 to 69,Schedule 9,Clauses 70 and 71,Schedule 10,Clauses 72 to 75,Schedule 11,Clauses 76 to 78,Schedule 12,Clause 79,Schedule 13,Clauses 80 to 82.—(Lord Evans of Temple Guiting.)

On Question, Motion agreed to.

Energy: Electricity Supply

Lord Tombs: rose to call attention to issues facing the electricity supply industry and to the case for a strategic decision mechanism; and to move for Papers.
	My Lords, this is the fifth annual debate on the subject, and the problems which initiated the series remain unaddressed and are of growing seriousness. Regular attendees will know that the privatisation of the industry effectively removed its capacity for strategic planning as a result of the fragmentation of the industry. For some years, Governments—I emphasise "Governments"—held to the view that strategic planning would be providedby the open market competition resulting from privatisation. That has proved to be a delusion. Instead, strategy has emerged, faute de mieux, from the Government's manipulation of the electricity market—not always successfully.
	Some may question why we are concerned today only with the electricity supply industry and not directly with other energy industries. There are four reasons for that. First, electricity is derived mainly from the primary fuels—coal, oil, gas, nuclear power and hydro. Secondly, electricity cannot be stored so the industry operates by responding, almost instantaneously, to demand. Thirdly, electricity is relied on nationally to an extent unmatched by any other energy industry. Fourthly, electricity is theonly practical large-scale outlet for the products of renewable energy and is likely to contribute to reducing the CO2 emissions of our largest polluting sector—ground transport. All those issues enterour deliberations and underlie the needs and shortcomings of the present electricity industry.
	Let there be no mistake: the absence of any clear strategy for the industry has resulted in a serious situation today, for we will be increasingly reliant on gas supplies for some decades to come, many of them from unstable areas of the world and at increasing cost. That will inevitably bring the probability of interruptions of considerable duration in electricity supplies. It is now simply too late to take effective remedial action; even if positive decisions are taken now, planning and construction times are too great. There is virtually nothing that we can do to offset that risk. That is the price of relying on national and international energy markets to provide a strategy which has traditionally been the responsibility of the industry. Laissez-faire on the part of successive Governments has exacted a grievous and lasting price.
	Prior to privatisation of the industry, security of supply was ensured by diversity of primary fuel supplies: coal, nuclear, oil, gas and hydro. That diversity was sacrificed by the dash for gas at the time of privatisation. Virtually all power stations builtin the past 20 years have been gas-fired. The independent generators followed market forces and invested in gas, with its advantages of cheap fuel, low capital cost and short construction times. It was an eminently reasonably course within market considerations at the time, but relied heavily on the reliability of overseas gas supplies. During our debate, successive Ministers have reaffirmed their confidence in that approach. However, recent history has shown how misguided that was, locking us into increasing future dependence on imported gas.
	During the past 20 years, a period we might fairly describe as the locust years, our coal, oil and nuclear power stations have grown older and are today well past their designed lives. They will progressivelyfall out of service. To replace them will provea time-consuming process. Their short-term replacement must be more gas stations, exacerbating the problem of gas dependency. Measures are in hand, it is true, to increase our gas stocks, but we are talking in terms of days, not weeks or months. Some reliance is being placed on liquefied natural gas, but that will also come from politically sensitive areas.
	What of the billions of pounds spent on subsidising wind farms? Wind is certainly the most proven of the renewable resources we so often discuss, but is of practical value only when it blows at a sufficient, but not too great, speed. Wind generation is consequently available for only about a third of its nominal capacity—and that at times which seldom coincide with peak demand. There is no doubt that it has saved a considerable amount of CO2, but at a great cost which is likely to sharply increase when the offshore wind programme gets under way.
	It might be useful to digress here to ask why we embarked on such an ambitious programme of wind power. First, it was undoubtedly the only renewable source capable of making a significant contribution to CO2 savings today. Secondly, it appeared to some to be an alternative to nuclear power, an error for which there can be no excuse given its intermittent output; I fear that crude prejudice was also a strong factor. Additionally, the enthusiasm of wind power supporters led them to assume load factors which have not been achievable in practice, so that the CO2 savings have been less than expected and the subsidy for operation will be substantially higher than the government figure of £30 billion for the period to 2020—but continuing, of course, beyond that date. We must hope that a similar fate does not await offshore wind, though I fear that it probably does.
	I have said that wind power is the only renewable source presently capable of a substantial contribution to CO2 reduction, and we have seen how expensive and disappointing that has been. I am afraid that the same handicaps of cost and effectiveness are shared by the other renewable energy developments now in the experimental or pilot stages. There is no shortage of renewable energy, but its diffuseness and intermittency make it an expensive and fitful contributor to our problems.
	Unfortunately, there is no shortage of proponents of various renewable sources. Their ability to deliver reliably and at reasonable cost is unfortunately unlikely, despite the credulity of politicians seeking green credentials. Novel solutions abound, but hard facts do not match them. There is a real need, as I said during last year's debate, to subject visions to the test of reality. The current fad for distributed generation, where individual homes are powered by solar power or gas-fired combined heat and power—CHP—is the latest example of a worrying lack of common sense, to say nothing of the technical problems involved. Some supporters of this particular nostrum see its adoption as rendering the electricity grid obsolete. However, they seem to be able to simultaneously support large onshore and offshore wind farms which will require the grid to transport their output, wherever it may be available, to distant urban areas. This incoherence does not appear to worry them.
	The everyday practicalities of the notion of distributed generation, however, are quite clear. Demand varies between summer and winter, so that generators are unlikely to run throughout the year and consumers will require a standby mains supply of electricity for that reason, as well as to cover the inevitable breakdown of the individual units—enter the grid, again. How it will be possible to estimate the amount of standby supply required and recover the costs of standby is another and more complicated matter, but not one which interests those environmentalists who seem to enjoy the ear of politicians of all parties. It needs to be kept in mind when considering the romantic notion of exporting to the grid from myriad homes.
	I hope that the threat to the security of our electricity supplies is now clear and that our inability to influence it in the short term is recognised. Therefore, let us turn to the other pressing energy problem facing us and the rest of the world, which is climate change. It is now accepted that CO2 emissions must be reduced by all nations, and it is surely evident that the industrialised and industrialising nations have most scope to influence future emissions. International agreements have a crucial part to play, but I want to dwell for a few minutes on the UK situation.
	Our efforts over the past few years have been strong on rhetoric but ineffective in practice. Our CO2 emissions, having fallen for a brief period, are now rising and will continue to rise as our ageing nuclear power stations have to be taken out of service. They, and the ageing coal and oil stations, will be replaced in the short and medium term by gas. A growing contribution from wind will help, as will energy savings. However, we need to move as quickly as possible to other energy sources capable of high load factors and reliable production, which means coal and nuclear power. Coal can be regarded only as a medium-term contributor, because it depends on carbon sequestration and storage on a scale notyet achieved. To rely upon an early and affordable solution would be to take unreasonable additional risks.
	It follows that we need to pursue the introduction of new nuclear power on an urgent basis. In doing so, we shall have to compete with a world that is rapidly reaching the same conclusion, and we shall find that the manufacturing and construction skills have suffered worldwide from a period of neglect and so will come under pressure. We should note that the British manufacturing industry relevant to our problems has largely closed down during the past30 years and that the failings of the electricity supply industry have contributed strongly to its demise. However, that is another story which must not divert us from today's pressing problems.
	I believe that the best that we could hope for, given a real sense of urgency, would be for the first station to come on line 10 years from now, followed by one station annually for perhaps five years and then two stations annually. Even for such a programme to be feasible, we have to start now by identifying the design we want to use, clearing the safety case and identifying sites which would, of course, be subject to planning consent. At present, there are a number of serious obstacles to any such programme. The first problem is the effective location of the industry strategy in the DTI. To make Ministers and civil servants responsible for such decisions is plainly absurd, given their lack of any business or technical experience and their constant job changes. There seems to be no way of making the industry itself the centre for strategic decisions, given its fragmented nature. The second problem is that the choice of reactor has to be made and the safety case satisfied. Those activities, in the interests of speed and economy of scarce resources, have to be concentrated in one decision-making centre. Three of our largest power companies—one French-owned, one German-owned and the third Spanish-owned—would not readily agree to one of them filling this role, and the urgency of the matter does not permit the idea of a consortium. The third problem is that some way has to be found to finance the construction. As in all industries, that role eventually falls to the consumer, and the tariff structure has to provide the cash flow needed for the programme, which will be cash-negative for around 15 years, a concept that is not unfamiliar to technologically based industries with long lead times.
	My experience in the electricity and other long-term industries leads me to believe that these difficult problems are not soluble by a Government finding themselves in the driving seat—and largely responsible for the problems that present themselves. It is true that the Secretary of State for Industry is statutorily responsible for security of electricity supply, but that requirement does not readily translate into meaningful strategy, much less action. I believe that the problems can be addressed by a clear strategy, and I would like to suggest solutions to tackle them in the order I raised them.
	First, the strategy of the industry must be placedin the hands of a statutory body to avoid the discontinuities of government. In our first debate in 2002 I commended the example of the Electricity Commission, which served the country well from the mid-1920s until 1947. It too had to deal with a fragmented industry in a competitive environment. The parallel is not a close one, but I believe that it offers an acceptable structure. I should say here that in 2002, when I first raised this, the Minister replying to the debate dismissed the idea on the grounds that such a body was unnecessary, and gratuitously suggested that I might be looking for a job. The first of these objections is surely no longer to be taken seriously, and the second was wrong then and remains so today. I am sure that such a commission could readily be formed by able, experienced and much younger people than me who would be able to construct a strategy and see it implemented.
	Secondly, one company needs to champion and deliver the programme. In British Energy we are fortunate to have a pool of talented and experienced people who could undertake the necessary steps to launch and carry out such a programme. They are responsible for the safe operation of our nuclear power stations, apart from the Magnox ones, and have performed well under a variety of difficult challenges.
	The third problem, that of financing the programme, requires the use of cash-flow incentives similar to the renewable obligation certificates—the famous ROCs—which have been successful in developing highly subsidised wind power. That success has been due to the fact that investors are not required to take significant risks over which they have no control, and, in the case of wind, the need for a subsidy. In the nuclear case, when the Government cease to cream off most of the cash reserves of British Energy, it will be possible for substantial internal financing too.
	All this seems obvious and sensible. Without some such solution we will not be able to tackle either the security or the climate change problems which I have described today. But the matter will require strength and vision by the Government. One difficulty is that the DTI has been able effectively to commit more than £30 billion to the wind programme without reference to the Treasury, Parliament or the Public Accounts Committee. To the best of my knowledge that is unprecedented, and it is surely undesirable. The present situation allows the DTI and Defra to share that power base, and it would be surprising if they willingly surrendered such a unique position. However, without a solution on the lines I have outlined, I do not believe that our problems of security of electricity supply and CO2 reduction can be tackled.
	I have one final point; I do not propose to arrange for a repeat debate next year, though other aspects of the energy crisis—for such it is—will doubtless attract the interest of all of us here today. My purpose has been to draw attention to a serious structural problem in the electricity supply industry, which stems from the long-term and fragmented nature of that industry and the manner of its privatisation. I would dearly like to claim that the debates have been influential in shaping government policy, but that would be extravagant and with little supporting evidence. I will, therefore, content myself with the observation that many of our warnings, unheeded at the time, have come to pass, and that some politicians and civil servants may have gained some useful insights by reading the Hansard record of our debates.
	The problems now are far greater than in recent years, and I hope that I have been able to stimulate some constructive discussion—perhaps even actions—which will contribute to their solution. I beg to move for Papers.

Baroness Ford: My Lords, I begin by congratulating the noble Lord on his success in securing the debate. Although I am a newcomer in your Lordships' House, I come to this debate with great enthusiasm, support and a terrific respect for the expertise and experience which the noble Lord brings to these matters.
	I declare my interests. I am a director of the Serco Group plc, which has some commercial interests in the UK field. I am the chairman of English Partnerships, the national regeneration agency, which has a serious interest in promoting low-carbon new communities and new settlements across England. For information, I was a director of the Gas and Electricity Markets Authority from 2000 to 2004.
	In addition to those interests, I also confess an attachment—a long-standing personal and family interest in these issues. As a child, my family followed my father's career from Hunterston A and B to Wylfa, to Heysham and to Hinkley Point. My children grew up knowing that their paternal grandfather also had a most distinguished career in the electricity supply industry, latterly alongside the noble Lord, Lord Tombs, in the Electricity Council in its heyday. So I hope that the noble Lord will not be offended if I tell him that in our family when I was growing up he was something of a towering figure in the industry, and it is an absolute pleasure to be participating alongside him today.
	Post-liberalisation, we have enjoyed a settled and mature situation. We have large successful companies which have now chosen to invest in and supply the market with a much more diverse generating mixthan we had pre-liberalisation. That is a success. Investment levels have been high—indeed, higher post-liberalisation than before—and prices have remained affordable, among the very lowest in Europe. We have a mature regulator which has developed and shown itself capable of acting in a long-term strategic manner—certainly from my experience—and of adapting to change in public policy, especially in embracing social and environmental responsibility and, as we saw in the announcement in January from the European Commission, of showing strong and sustained leadership in Europe in trying to reflect UK liberalisation in European markets.
	However, I agree with the noble Lord that the past 20 years may prove to have been "the best of times". As he said, we have enjoyed the benefit of North Sea gas, but also the benefit of the nuclear fleet in its operating prime. But, towards the back end of last year, the average person in the street might have thought, as I did, that three separate things came together that are worrisome. Many noble Lords may have seen the "Panorama" programme which talked about the vulnerability of our gas pipeline. That was a cause for concern. Many people will have been taken with the conclusions of the Stern report and started to think much more deeply about climate change. At the same time as those things were being mulled, people's gas and, God forbid, electricity bills may have dropped on their door mat. The average man or woman in the street might be forgiven for asking, "How secure is our supply and what are the Government doing about it?"—in other words, posing exactly the same questions as the noble Lord posed with such erudition this morning.
	However, when I ask myself those questions, I take heart. My view is different from that expressed by the noble Lord. I believe for two or three clear reasons that a strategic view lies at the heart of the Government's policy. The Utilities Act 2000 placed a personal and collective responsibility on the Gas and Electricity Markets Authority, alongside the Secretary of State for Trade and Industry, to ensure security of supply in the long term—"a diverse and secure supply", as the statute puts it. That responsibility does not sit lightly on the shoulders of the 10 members of GEMA or, I am sure, the Secretary of State. I must tell noble Lords that when I was in that position for four years, that responsibility weighed extremely heavily on me. I think that we discharged our responsibilities in exactly a manner that reflected the seriousness of that weight of responsibility.
	The second reason I take heart is that I believe that in the energy review, the Government faced up in a very timely way to the changing nature of the issues in front of us, which the noble Lord, Lord Tombs, has already set out. Equally, the Stern report provided a more urgent economic and moral imperative at the end of last year. So I do not take the view that no strategic view is being taken of the issues; one certainly is.
	On a day-to-day level, the DTI and Ofgem participate in the Joint Energy Security of Supply Working Group, so they are keeping the long-term strategic position under review. We have 20 years of strong evidence from companies in the sector that have invested and continue to invest in a diverse generating mix. That is extremely important. Although the strategic role is being exercised differently from the way envisaged by the noble Lord, I think that it is being exercised effectively and appropriately for a market-based system.
	There is also strong evidence of professional leadership. The recent success that Ofgem has secured in the liberalisation of European markets is a tribute to the leadership of that organisation and its persistence over the past four years with the European Commission.
	Politically, the Government have not shied away from facing up to the difficult choices in creating a secure and stable generating mix. I do not disagreeat all with the noble Lord about the optimal mix. I believe that we need the sector to produce a predictable base load. We need significant renewables, but we need a mix. I absolutely echo the points that he made about investment in the nuclear sector, although we might have differences of view about the means by which we procure that.
	The creation of a strategic body directing new investment would not change the fact that the real leadership that is required, particularly if we look at these issues through the prism of climate change, is political. I ask the Minister whether the time has come to reinstate a Secretary of State for Energy, who would be totally focused on these critical issues. Circumstances have changed: the environmental impact is now widely understood; the UK economy's global competitiveness depends on the quality and price of energy supply; and we, as individuals and households, are now focused on making real changes to the way we live. I do not make that suggestion to my noble friend glibly. This is not about simply reorganising the machinery; it is about the more fundamental point of having a Cabinet post with real focus on these important issues at this time.
	I will end on a narrower point. My day job is about making sure that, in stewarding the Government's land portfolio, we create new communities and settlements that conform to the very best design and environmental standards. One of our clear objectives is to create communities that will be, in so far as we can manage it, carbon neutral. If we agree that the recommendations in the Barker report are sensible and that we ought to be moving to something approaching a productivity level in new house build of 200,000 homes a year, there is terrific scope to do more in terms of energy efficiency.
	I have a request for the Minister. The housebuilders regularly tell me that when they want to do quite modest things, such as introducing combined heat and power plants in new housing developments, they run up against a real obstacle. Once they go over 500 units, the regulator treats them as a commercial supplier of electricity, subject to all the incentive and reward regimes that apply to much larger suppliers. That removes the incentive for those housebuilders and developers to do practical and sensible things that would be good not just for households but for climate change. I wonder whether my noble friend would be kind enough to take up this issue with DTI colleagues to ensure that sustainable or renewable schemes are not lost to us simply because of a lack of co-ordinated policy in this area.
	Again, I congratulate the noble Lord. I finish by saying what a pleasure it is to be part of what I understand from my research has become an annual event.

Lord Jenkin of Roding: My Lords, the noble Baroness, Lady Ford, brings considerable experience and her family history to these debates. She has rightly congratulated the noble Lord, Lord Tombs, on what I think is now the sixth debate in a series thathe has instituted. I assure him that they have hada considerable impact if not necessarily on the Government directly then on many of those who are concerned with our energy policy. The one person whom we shall miss in today's debate is my former noble friend Lord Peyton of Yeovil, who, at every one of those debates, gave a very pertinent and punchy commentary on the thesis of the noble Lord, Lord Tombs. I, too, declare an interest. Whereas most noble Lords will be enjoying their Recess after the House rises this evening, I, with other members of the all-party group on nuclear energy, will be making a five-day trip to France, where we will be guests of Areva, which is perhaps better known to the old hands as Framatome, the French nuclear company.
	In previous debates—indeed, in a debate that I instigated last year—I have laid great stress on the role that nuclear power must play to meet our future needs. I think that this argument is now won. Weare still waiting for the Government's definitive announcements in the promised White Paper, but it is quite clear that they have come to recognise that new build is now essential. Therefore, I am not going to use my time today to repeat all the arguments that have been deployed in seeking to win this argument. Nothing has happened recently to weaken the arguments. Indeed, the noble Lord, Lord Tombs, mentioned one or two of the problems. The casefor more low-carbon sources of energy is now overwhelming. We have read the Stern report and have had the IPCC report, which have reinforced the arguments for low-carbon sources. Of course, the lifetime cycle of a nuclear plant is very low-carbon indeed; it is roughly equivalent to wind power.
	We have also become aware of the increasing dangers of relying on imported gas from regimes that are not only unstable but that may become actively hostile. That has been underlined by the palpable readiness of President Putin's Russia to use energy as a political weapon. I shall say a word or two about this. Last month, Mr Robert Amsterdam, an international lawyer with a huge knowledge of Russian current affairs, addressed the Parliamentary Group for Energy Studies. The picture that he presented to the group was very disturbing. The deliberate use of Gazprom to dominate European energy markets when there is little or no reciprocity in Russian markets, the shameful bullying of Shell over the Sakhalin oil field, and the totally unbalanced negotiations with the European Union—leading in reality, as Mr Amsterdam said, to the humiliation of the EU—are just three examples of the threat that Europe faces.
	Gazprom is not a normal company, and should not be treated as one. It is entirely controlled by the President's office in Moscow, and it is blatantly being used as an instrument of Russia's foreign policy. Gazprom is busily engaged in a co-optation process—lining up UK banks, consultants, and others to help to further its objectives. There have been suggestions that Gazprom should buy Centrica, one of our biggest energy companies that is still largely British-owned. I hope that the Government will be wise enough and tough enough to knock that threat very firmly on the head. In no way could there be reciprocity. The former German Chancellor, Gerhard Schröder, by ending German nuclear power, put his country in hock to Gazprom and Russian gas. He then compounded that huge disservice to his country by taking a job with Gazprom.
	The noble Lord, Lord Tombs, has emphasised that time is now very short. However, it will take time, and we must do all that we can to extricate ourselves from becoming far too dependent on imported gas. I did not cheer when I read the report of yet another major new investment in a combined-cycle gas turbine, as that merely multiplies the problem. To my mind, the need to avoid dependence on foreign gas is always one of the strongest arguments in favour of ensuring that our mix of nuclear sources—most people recognise that there must be a balanced mix—includes a clear programme of building new nuclear power stations. It is very galling to have to listen to French nuclear experts in this area say that they are prepared to help Britain to deal with the looming energy gap, when we consider that we led the world in civil nuclear power.
	What do we need? We need a clear political framework. The noble Lord, Lord Tombs, has suggested his own solution for that. The noble Baroness, Lady Ford, believes that we have such a framework already. I am modestly encouraged by what the DTI is doing. The appointment of Mark Higson about six months ago as head of the DTI's nuclear consultation and liabilities team was a step forward. I am told that Mr Higson sees his role as removing the barriers to nuclear build. There certainly are barriers, not the least of which isthe planning process. His job includes definingthe criteria for siting new reactors, developing the justification for new build—that is required by the EURATOM treaty—developing proposals for public consultation, and regulatory co-ordination between HSE/NII and the Environment Agency and SEPA.
	So far, so good. However, I am concerned atthe evident overlap between the DTI and Defra.The Nuclear Decommissioning Authority (NDA) currently reports to Defra Ministers, yet I read that Mr Higson at the DTI has been given responsibility for radioactive waste management policy. That cannot be sensible; it is not viable and it must be changed. I do not expect the noble Lord, Lord Truscott, to announce the merger of the DTI and Defra when he responds later today; it will be a matter for the new Prime Minister.
	Rightly, the Government look to the private sector to invest in new power stations but, for that to happen, several things must be done. Both the noble Lord, Lord Tombs, and the noble Baroness, Lady Ford, have mentioned some of them, but I want to pick on one issue that neither of them mentioned: the need for a carbon price to be operated in a reasonably predictable way. I have given the Minister notice of this point because I would not have expected him to be fully aware of all the arguments about the price of carbon, so he has had a day or two to think about it.
	The market is well used to judging risks—energy costs, capital costs, financing costs and so on—but trying to work out what the carbon market will produce is a risk of an entirely different order. Those risks are unascertainable at the moment. Present policy is to base it on the European Emissions Trading Scheme, but phase one has had a shaky start, with wide fluctuations in the price of carbon, and phase two, due to begin in 2008, looks little better. Phase three is due to start in 2012, and nobody has the slightest idea what it will be. I have heard 2012 described as "a cliff-edge" for the industry. If the ETS is to develop as a real operating market, putting an effective and predictable price on carbon, it is essential that Governments—I refer not just to this Government but to all of them—should set a proper framework. At present, this is all very unclear,with the consequence that the market is working imperfectly. Moreover—this may come as a surprise—as at present operated, the ETS excludes from the scheme carbon free technologies such as carbon sequestration and nuclear power. This must be nonsense and must be addressed.
	Actually, the situation is even worse than that. I have been given sight of a paper from an industry source. I will read its opening paragraph because I find it extremely disturbing. It states:
	"The EU ETS as currently structured is not capable of underwriting the investment needed to reduce CO2 emissions in the electricity sector and move the UK to a low carbon economy. The primary reason for this is that the policy timescales of the EU ETS do not match the investment life cycles of the sector and investors are unwilling to accept the regulatory uncertainty surrounding future CO2 abatement targets. Furthermore, the timescales of policy development must recognise the need to achieve significant carbon dioxide reductions in the next capacity replacement cycle in the electricity sector to deliver the carbon dioxide reductions that Government aspires to".
	As it stands, this is not a viable policy.
	This paper, The Carbon Hedge, which I understand has been discussed with DTI officials, goes on to outline the potential risks faced by investors inlow carbon technologies, which include not only nuclear reactors, but also clean coal and carbon sequestration. I heard only yesterday that the BP plant at Peterhead using the Miller field, which is intended to be low carbon, is entirely dependent on the credit it will get for being a carbon-free source, and it does not know what it is. At the moment, it is a demonstration plant, but it will not work unless the future price of carbon is known.
	The paper goes on to propose a new mechanism intended to hedge these risks and to provide greater certainty until the EU ETS is developed to the point that it becomes a viable and predictable long-term market in carbon. In that sense, it is a transitional arrangement. It is hoped that it will,
	"reinforce the functioning of the EU ETS and enable it to galvanise the early investment in low carbon technologies".
	This carbon hedge is one serious proposal put forward by a potential major investor in UK energy supply. There may well be other suggestions.
	I hope that the Minister will be able to tell the House how this Government intend to address this issue. I can tell him that every potential investor in new energy investment in this country—I have spoken to a great many of them—has stressed the huge importance of getting this carbon problem right. However effective the Mark Higson team may be in providing strong justification and so on, and however swiftly it deals with regulatory co-ordination, it will all come to nothing if the markets cannot see a reasonably clear way ahead on effective carbon pricing.
	I say to the noble Baroness, Lady Ford, that I find it surprising that in the eight foolscap pages of Ofgem briefing that arrived on my screen late last night—I did not see it until this morning—this carbon issue receives no mention at all. When I spoke to the chairman, Sir John Mogg, a few days ago and asked him whether he was going to play any part in regulating this carbon market, his answer was a very clear "No, it is for Governments". So I put that to the Minister, and I look forward to hearing what he has to say about this issue.

Lord Teverson: My Lords, I, too, thank the noble Lord, Lord Tombs, for bringing this debate to the House. I have not previously contributed to this debate. Energy supply is an emotional issue, but it should not be. Those of us who have worked in industry would like to know that energy is available, its price is predictable and it will be available in the long term, and would like to leave it at that. But I also recall being summonsed earlier in my political career to a farm in a very beautiful area of Cornwall. The farmer called me there because there was a proposal to construct a quite large wind farm nearby. He took me up to his farmhouse, showed me the view and said: "Look at that. That whole vista will be ruined by wind generators". I looked out across the countryside, but the first thing I saw were 60 or so transmission pylons which had destroyed the vista some 50 years before. The farmer had not noticed them because they had been there so long.
	There is a lot of emotion around renewable energy projects, especially wind farms, and certainly a lot of emotional energy around the nuclear debate. As noble Lords have said, in the past 10 to 20 years we have seen a fundamental change in the energy supply industry. For many years the Government have relied on the fact that we have already beaten our Kyoto emissions targets, primarily by moving from coal to gas for electricity generation. However, as noble Lords have also noted, our emissions are increasing because of the change in gas prices. We may now even miss our target because of energy generation by coal technologies.
	I might be expected as a Member sitting on these Benches to be completely anti-nuclear. I am certainly not anti-nuclear on principle but believe that there are a number of issues around the nuclear industry. All the arguments have not yet been won but they are extremely important in planning our future energy supplies. The first issue, as noble Lords know, is nuclear waste. Although Finland believes that it has solved the problem by using deep geological storage, we do not yet have an answer. Security, especially the threat of terrorism, is another problem. A plethora of questions need to be asked and answered to our satisfaction in this area. On finance, I fully accept that a number of renewable energy projects benefit from substantial subsidy. I do not think that there are any technical reasons to stop proposals for building new nuclear power stations now and on a commercial basis. But there are all sorts of other barriers, not least planning issues. And nuclear power cannot proceed without considerable public subsidy in one form or another.
	One of the few issues to unite people in Cornwall—that most south-westerly of counties, where people are known for arguing among themselves so regularly—was a proposal in the 1970s to build a nuclear power station in the Fowey and Lostwithiel area. Everyone came together to protest against it. I do not believe that public opinion has yet moved to the extent necessary to allow us to regard nuclear power as the silver bullet to address the immediate problems.
	We have a number of alternatives. On renewables, wind power has yet to address the problem of continuity of supply. We need to look at energy efficiency in a number of other areas and, as has been discussed, consider carbon sequestration and clean coal technologies. All those areas are equally important. In their energy review last year, the Government put down a clear marker that they wished to change their mind on nuclear power. I was most concerned about the hesitation they showed on energy savings and the renewable energy agenda which they had previously backed both strongly and, I think, bravely. That hesitation will cause uncertainty in those industries.
	I should specifically like to ask the Minister about one continuous source of renewable energy for electricity generation not mentioned in the review: deep geological thermal energy, also known as "hot rocks" or "hot dry rocks" technology. We have a potential source of geothermal electricity in the south-west of the United Kingdom, where there isa great deal of underground granite. Previous Governments undertook research in this area but that was closed down in the mid-1990s. Although the research was very successful, more money for it could not be found. Instead, the research moved to Alsace, near Strasbourg. Perhaps the Minister was able to visit the location when he was in Strasbourg. I was not able to do so because there was heavy snow on the day scheduled. However, that power station is now starting to fire-up and will be a proper test bed for hot-rocks energy. Will the Government look closely at the success of the project and consider whether it could be used in the UK? One hot-rocks power station could generate about 30 megawatts of power, has a fairly small footprint and would not create a large impression on the landscape. It is an area that has not been explored but should be.
	I was pleased that the noble Lord, Lord Jenkin of Roding, raised the issue of carbon pricing. As he said, it is key to how the market plans future energy supply. As a Liberal, I am very much a market-oriented person. I believe that we should allow the market to take the lead subject to certain energy security issues. I agree with the noble Lord's absolutely accurate comments on Gazprom and its agenda.
	For a market to work there has to be a guarantee of stability over an investment period—which can be very long in the energy sector. We have to know the price of carbon or the levels of carbon taxation—whichever way the Government or the European Union wish to take this forward in EU emissions systems. It is critical that beyond Kyoto, 2012 and the current limit of the EU emissions scheme, something is put in place in the next couple of years to cover us post 2012. That is the most important task in addressing energy supply and climate change.
	This is an emotional area. The Governmentshould not use nuclear as an excuse to hesitate on their renewables strategy. However, returning to my industrial background, I know that British industry needs to know that it has a secure energy supply and that it can predict its costs although those costsmay rise.

Lord Dixon-Smith: My Lords, like everyone else who has spoken, I am grateful to the noble Lord, Lord Tombs, for bringing his perennial debate before us once again. If I understood what he was saying at the beginning of his remarks, I am saddened that he is beginning to feel it is perhaps time that he ceased to carry the baton. I hope that he will carry it rather further into the future than his remarks appeared to imply.
	I agree with so much that my noble friend was saying about the nuclear industry. One of the dangers we have to face—it is not really a danger; it is a problem—is that nuclear exists. If we are to meet the Government's policy objectives, it may be the only solution. I wanted to spend a few moments looking at government policy and its implications, because we now have some startling ambitions.
	The EU itself has recently come out with its policy of a 20 per cent reduction in CO2 emissions by 2020 and a 20 per cent increase in energy efficiency by 2020; a 20/2020 policy. The Government themselves have stated an ambition to reduce carbon dioxide emissions by 60 per cent from a 1990 figure by 2050. To put that in perspective, the Carbon Dioxide Information Analysis Center at Oak Ridge in Tennessee has published a paper by Messrs Marland, Bowden and Andres which has figures for United Kingdom CO2 emissions back to 1751, would you believe. To hit the Government's target, we have to get our CO2 emissions back to what they were in 1870, when the population of the country was only26 million. That is a severe target. My own party has pledged that an 80 per cent reduction by 2050 would be more appropriate. The same source suggests that that would take us back to the level of CO2 emissions in 1849, when the Industrial Revolution was really taking off and the population of the country was only 20.25 million.
	These are huge commitments. As the noble Lord, Lord Tombs, and my noble friend Lord Jenkin were saying, they place severe constraints on futureenergy policy. One only has to think of the leadtime for constructing a power station. I accept thatwe probably could build a nuclear power station in10 years, possibly on an existing site, but for most new power development it may be more realistic to consider 15 years to be the planning period. With the life of a plant being 30 years, that takes us to 2050, for when the Government have set these ambitious targets. The Opposition's targets are even more ambitious.
	We should be quite clear that if the Government wish to achieve these targets, they will have to establish the rules that will make it possible. This is significant. We have freed our energy markets asfar as we can, but the fact is that the Government, and indeed society, will now have to look at these long-term implications. Realistically, we probably ought not to be constructing new electricity-generating plant that emits carbon dioxide at all from now on.
	I am aware of the issue of carbon sequestration. It is still an unproven technology. The cost estimates that I have seen are between $40 and $60 per tonne of carbon dioxide to be sequestered. That would work out as a huge on-cost of somewhere between £50 and £75 per tonne of coal used. One of the good things about this, if good there is in it, is that when you start to put those realistic figures into energy costs, all other sources become highly competitive.
	We have heard much about wind, but nothing about tidal. We have three large estuaries in this country that could provide a large amount of power: the Severn, obviously, the second most powerful estuary in the world, but, balanced on the clock, the Thames and the Humber could produce a verylarge part of the United Kingdom's electricity. The Pentland Firth in Scotland has enough tide rip running through it to provide the whole of Scotland's energy without any particular difficulty, apart from transmission problems and so on.
	As for finance, one should not belittle the problem, but currently I understand something like £2 trillion per annum is being invested in the oil and gas industry. Those who are responsible for that investment need to start looking seriously at the implications of what is happening for the future as a result of global warming, and to consider whether that investment is still appropriate. I declare a marginal interest: I am going to Russia on Saturday, where I suspect the Russians will try to brainwash me into the virtues of their oil and gas industry. I hope I come back, because I will be like a cat in the squire's pigeon loft, trying to tell them that their investment needs to be regarded as short-term. Most of the world, in my view, will see the need to get out of these fuels before long.
	We talk so much about energy efficiency and hear about it in the industrial and domestic sectors—the noble Baroness, Lady Ford, was pressing this very much, particularly in relation to new build, although we have to tackle existing properties as well—but we do not hear energy efficiency talked about with regard to the electricity-generating industry itself. That point is well worth making.
	The figures are stark, and I am grateful to the DTI for them. I will express these figures, as the department did to me, in terawatt hours, a terawatt hour being 1 billion kilowatt hours. The total energy input to the electricity-generating industry in 2003 was 1,031 terawatt hours. The total energy generated was 399 terawatt hours. The difference between the input and the output was 632 terawatt hours. As the DTI says, somewhat drily, it was,
	"dissipated in the form of waste heat or was used in the generating",
	distribution,
	"process, although it is not possible to estimate the relative magnitudes of either factor with accuracy".—[Official Report, 20/6/05; col. WA 152.]
	Heat is a huge industrial resource, produced by these industries in vast quantities. We do not know the exact amount of waste heat that is recoverable, but if it is only half that difference it still equals three-quarters of our annual generation. It would represent a huge increase in efficiency if that heat could be recovered and used, as it ought to be. Whether or not it is low-grade heat, which has no particular industrial use, is neither here nor there; my understanding of the principle of heat exchange is that it could be converted to a form of high-grade heat that might have an industrial use. Alternatively, it would be extremely useful in things like district heating and so on.
	That comes back to a separate issue that we have also heard about: planning. Ideally, even a nuclear power station ought to be somewhere like Battersea. Curiously enough, most of Battersea is plumbed to take waste heat from power stations, for obvious reasons. The plumbing is now totally redundant, of course, which is very sad. The use of that waste heat is something we can no longer afford to pass by. The Government will have to deal with that.
	I am aware that we are awaiting publication of the Climate Change Bill. It would be nice if the Minister could tell us at the end of the debate when we are likely to see it. I have heard rumours from the other end that there might be pre-legislative scrutiny. I do not think we need that particularly, because it will simply delay the process. What is important is to get the Bill out into the open so that it can be properly examined by both Houses of Parliament and we can begin to move this whole issue forward. Everything that has been said so far this morning indicates that time is short, and at the moment we are standing still.

Lord Redesdale: My Lords, rather than thank the noble Lord, Lord Tombs, I shall apologise to him; in past debates, he has set out one position and I have consistently set out the other, and I shall probably do exactly the same today. I hope that he will secure the debate again next year, because it is a useful occasion; I am sure it is just the snow that has prevented more people taking part.
	I should like to welcome some good news, for a change. A press release this morning said that for its residential customers, British Gas is reducing its price for gas by 17 per cent and for electricity by 11 per cent. I declare an interest, not as a British Gas customer, but as somebody who is hoping that the other companies will follow suit so that I can reduce my energy bill. I understand the reason for the time lag, but it is high time that many other companies also took the step of reducing bills for residential customers, especially in this cold period, when fuel poverty once again raises its ugly head.
	The title of the noble Lord's debate covers the strategic aspects of electricity. I know that this is a roundabout way of discussing whether nuclear should be back on the agenda. While I feel tempted to lock horns on that issue, I will go wider. Nuclear is not an irrelevant part of the energy mix, accounting for roughly 20 per cent of our power needs. Renewables account for only 4 per cent, gas for 39 per cent and coal for 35 per cent. In one way, we have got sidetracked into the nuclear debate. Obviously nuclear is important, with its base-load potential; however, one area is particularly under-reported. Everyone has mentioned the dash for gas and the noble Baroness, Lady Ford, mentioned the problems with gas. There is good news, however; since last year, the gas supply to this country has gone up by 135 per cent, which is helpful. The gas coming from the Norwegian fields is much more secure than that from some other sources.
	However, the rise in the amount of electricity that we are generating from coal is a significant proportion of the mix. With the planning constraints, this will not change for the next few years—for the next decade or even two. Therefore, instead of ignoring coal as a dead industry that is disappearing, we have to look at the real issue. When the gas spot prices went up last winter, the mothballed coal stations were taken back into service. That looks like it will happen more regularly, meaning that the amount of carbon generated will become a real issue.
	Noble Lords have all said that the underlying cause for building power stations and generating electricity in the past was to supply as much power as possible to outstrip peak demand and to reduce interruptions. Ofgem's briefing says that Britain's generating capacity is currently 75 gigawatts compared with peak demand of only 57. In the past 20 years, £30 billion has been spent on gas and electricity, and customer interruptions have fallen by 17 per cent. This was the over-riding view of how people designed the grid and the systems. The stark reality of global warming means that carbon will be the new driver of any future electricity generation.
	The noble Lord, Lord Jenkin, mentioned that carbon prices are of significant importance. They are important not just to nuclear but to all forms of generation. While nuclear has some benefit in carbon terms, there is no silver bullet in the energy mix. Each of the systems will have to come online, and each has its own problems, especially with regard to cost.
	It was not so long ago that a former Minister said, "My Lords, carbon has no cost". In the past five years, carbon has changed from a waste that had no cost to a major issue. Those involved in the building of new electricity-generating capacity are most concerned about the fact that it is impossible to plan any form of generation if you do not know what the rules governing carbon emissions will be. That includes nuclear, wind, gas and coal.
	If we are to look at new power stations replacing our out-of-date coal-generating power stations or removing the carbon content from coal and gas, which are fossil fuels, people must realise that they have to make any new and existing provision carbon-storing and capture-capable. There is no legislation that says that any new power station has to have this capability. A power station could be designed and built without any provision for capturing and storing the carbon. That is short-sighted but will be seen by future generations as unacceptable, even though the cost is high. If we are looking at such systems, the use of waste heat can also be built into the process. Some 60 per cent of all primary fuel goes up cooling power chimneys as steam; water vapour is also a greenhouse gas, so we should not underestimate the amount being pumped into the atmosphere.
	There are a couple of other areas we should consider. One, which was almost a victim of privatisation, was the cost of renewing the national grid. The present White Paper has rectified the situation, but the previous one unfortunately contained no discussion about the grid as a system that loses power. Much has been made of power generated in Scotland and taken to the south-east, but 13 per cent of power that is generated which gets out of the power station and is not lost up the chimneyas waste heat is lost on the national grid. I am particularly concerned that the substations' transformers being installed should be as efficient as possible rather than the cheapest ones that can be bought. There is a massive amount of saving to be made in the very infrastructure of the national grid.
	That brings me to decentralisation. The noble Lord, Lord Dixon-Smith, talked about having a nuclear power station in Battersea. I can see that having certain planning issues, with protests taking place in the centre of London. However, it is interesting that decentralisation, which has been proved to save an enormous amount of electricity, has this one flaw—we will have to generate far closer to home. I understand some of the annoyance felt about talk of pylons down the central spine of Scotland if that power is to be exported out of the country. But we should look at ways in which to bring about power generation closer to the south-east.
	One issue that particularly concerns me is that our planning system makes it almost impossible to look at small, localised schemes. I live in Northumberland National Park, where I tried to make a tourist attraction that I had carbon-neutral by putting up a small 6.2 kilowatt turbine. I was told that it was an alien and outlandish structure that would destroy television signals. We are talking about only a very small turbine, for which I was refused planning permission—not from planning officers, who said that it was a good idea, but from the National Park Authority. I took the authority to appeal and a year and a half later won the appeal, but it was a massive fight costing thousands of pounds over a very small turbine. How are we ever going to confront some of our issues if we are not to look at building turbines everywhere?
	We are not necessarily talking about the 2 to 5 megawatt turbines, which are 140 to 180 metreshigh; we could fit much smaller turbines, under50 kilowatts, below the treeline in ploughed fields. The green belt is an ecological desert for much of its area because it consists of ploughed fields. Starting with a large number of small turbines being fed into the grid would be an easy way in which to meet some of those issues—but it means that we shall have to look at the planning issues behind that. People will complain about the view, but that argument will come to be seen as short-term and ridiculous, considering that in the next 20 to 30 years of climate change we are looking at a rise in temperatures and sea level.
	The other aspect that should be raised is energy efficiency. I saw in the paper a survey for the Ideal Home Exhibition on energy efficiency appliances, which said that most people looked at cost rather than energy efficiency. Instead of educating people we should just regulate now to say that people can buy only those appliances that meet energy efficiency targets. I have always found it incredible that with such appliances, given a range of options on price, you very rarely look at the energy efficiency. If you take something back to source and say to the manufacturer that he has to do it at a certain rate, the manufacturer will do that. The price might be higher, but everybody is in the same position. I believe that the Government would have the support of all three parties and all Members of the House in considering further regulation, especially in the area of standby, which is such a waste of electricity. Of course, it would have health benefits if people were forced to get up and turn off their television rather than pressing a button from their armchair.
	I have one last question for the Minister—not the one put to him on whether there should be a merger of the DTI and Defra, but on whether he has any knowledge of Gordon Brown's policy statement in which he referred to the break-up of the DTI. That is of course a fabulous Liberal Democrat policy, so I recommend his sagacity in taking it up. But if hewere to break up the DTI, would the Minister be reincarnated as a Minister for a Department of Energy? With these issues growing in importanceday by day it is very important that we look at reconstituting a Department of Energy, and we would welcome him back in that role.

Lord De Mauley: My Lords, I join all other noble Lords who have participated in warmly thanking the noble Lord, Lord Tombs, for once again initiating this important and interesting debate. He has led similar debates every year since 2002—though I am a comparative late-comer, having entered the fray for the first time last year. This is a vital subject to the future security of our country—and how very appropriate to be discussing it on a day of cold weather such as this.
	The noble Lord, Lord Tombs, will correct me if I have the definition wrong, but my understandingof the term "strategic decision mechanism" is thata statutory body would centralise planning of electricity to guarantee secure supplies to our country, taking into account the imperatives of climate change. A key component of it is that it is for the long term. The noble Lord has been routinely disappointed that the Government's response has been along the lines that market forces will solve long-term problems so that no strategic decisions are called for. He believes that without a strategic decision mechanism, it is difficult if not impossible to have security of energy supply. He argues that it is not good enough to have an adequate plant margin, especially given the risk that important supplies of primary fuel may be interrupted for considerable periods.
	I am sure that the concerns of the noble Lord, Lord Tombs, will not be entirely assuaged by the briefing from Ofgem, from which the Minister may quote, to the effect that, among other things, that the massive rises in energy prices over recent years are now being replaced by falls, that investment has been at unprecedented levels and that competition will solve all the problems. It would be rash indeed not to be cautious, given the behaviour and volatility of one or two of the countries from which our gas supplies come, for instance, as my noble friend Lord Jenkin of Roding, said. While the importance of the opening of a new pipeline from Norway and new LNG terminals must not be underestimated, they are only part of the solution to securing our future energy supplies.
	The Government's report of last July on the energy review identified two main security challenges forthe United Kingdom: first, managing increased dependence on oil and gas imports, and, secondly, ensuring that the market delivers substantial and timely investment in electricity generating capacity and networks, so that households and businesses have the electricity that they need at affordable prices.Well, so far, fair enough. The report then suggested, as a policy proposal to meet the energy security challenges, first, a strong international agenda to promote more open and competitive markets, and, secondly, a market framework in the United Kingdom that is positive for investment and diversity of supplies and for the growth of our own home-grown energy. Well, of all the deep and insightful thoughts!
	The report went on to suggest that the Government are building stronger political relationships with producers to secure supply and backing the European Union Commission in its attempts to secure a liberalised energy market. It also referred to a preference for achieving energy reliability through diversity of our sources of energy, suppliers and supply routes. While there may not be a huge amount to disagree with in it, we have to ask if it was worth the wait. Then, as if we had not had enough, the Government launched a consultation—and we are still waiting for them to respond to that consultation. If, as the Prime Minister pointed out last year, energy is so important, why is it taking so long? I askthe Minister for a firm date for publishing the Government's energy White Paper. Can he please undertake that it will not be the day before we rise for a recess or, worse still, the day after?
	Another key recent development has been, on10 January this year, the European Commission's announcement of a proposed package of measures to establish a new Energy Policy for Europe, whichit claims will combat climate change and boostthe European Union's energy security and competitiveness. The proposals include reducing dependence on imported hydrocarbons, diversifying sources of energy, building infrastructure such as new liquefied natural gas terminals, and improving Europe's capacity to cope with disruptions in supply. The Commission is also seeking a new long-term pact with Russia on energy supplies.
	Opening up European energy markets is something we on these Benches have been demanding for a long time. The lack of a liberalised market in Europe has punished British customers with high fuel bills. The moves towards liberalising and unbundling the European Union energy market are therefore most welcome. European energy markets, particularly in France and Germany, have become characterised by corporate structures which protect one country against another and companies within them which have market-dominant positions in retail supply, transmission and distribution. This conflicts directly with single market rules and the Commission is right to act to end these practices. Will the Minister therefore undertake on behalf of the Government now to put pressure on other member states to implement the Commission's findings?
	We do not accept the argument that a single European Union energy regulator is needed to facilitate cross-border electricity trade, which would involve yet more stultifying European Union regulation and duplicate national arrangements. When the proposals to make the market more open and transparent are implemented, co-operation between regulators should be more than sufficient to provide for Europe-wide electricity trade. It would be helpful to have the Minister's views on this.
	For the poorer members of our society, however, and, in particular, pensioners, who spend a relatively large proportion of their income on energy, the cost of living is rising at an alarming rate. So in this respect, if and when fully implemented, we support the Commission's proposals which aim to lower prices for these consumers.
	The increased focus on reducing carbon emissions and developing renewable energy sources contained in this package is also good news. The United Kingdom presently falls short of pulling its weight in Europe in terms of renewable energy and the Government must do more if they are to meet the tough targets now being proposed.
	Returning to this country specifically, I am concerned about the future of the electricity supply industry and I believe that the Government's role should be to set the right framework for emissions reductions and energy security. As my noble friend Lord Dixon-Smith and other noble Lords said, we must develop a clear, long-term policy framework which incentivises the electricity supply industry simultaneously to reduce carbon emissions and to guarantee affordable security of supply.
	My noble friend Lord Jenkin of Roding set out his concern—the noble Lord, Lord Teverson, joined him in this—about the future regime for setting a price for carbon. Of course, he did not suggest that that was relevant only to nuclear. Among other things, as he says, the framework for the pricing of carbon emissions under the European Union Emissions Trading Scheme has not so far covered itself in glory. Furthermore, as my noble friend said, it will expire in 2012, which leaves the potential investor in plant which will not come on-stream until the middle of the next decade completely in the dark as to the key economic data, without which he cannot evaluate a project. We must know what the Government's plans are for resolving these uncertainties. While it is for the market to operate the system, it is for government to set the framework.
	The uncertainty has been exacerbated by the abolition of capacity payments in the New Electricity Trading Arrangements, which were introduced only as recently as the year 2000. This obfuscation has led directly to a reduction in the spare electricity capacity available in Britain, putting security of supply atrisk. In order to meet the strategic objective of a guaranteed secure supply of electricity at all times, we should develop plans for a new system to incentivise electricity generators to invest in spare capacity that can be kept on standby.
	Streamlining of the planning procedure is absolutely vital. Several noble Lords referred to that. What assurance can the Minister give that ministerial decisions will be made as quickly as possible following positive outcomes of planning inquiries? I ask this specifically because the Government appear to have been lax in announcing ministerial decisions on schemes following planning inquiries in cases suchas Canatxx and Byley, but, of course, the concern extends into all forms of energy generation.
	To sum up, we must be concerned about the growing energy gap. Approximately 30 per cent of the United Kingdom's existing capacity is scheduled to retire over the next 20 years, including all our Magnox and AGR nuclear power stations except for Sizewell B. That is why we have called for capacity to be a key factor in the formula for determining the wholesale price of electricity. This will encourage new investment in power generation plant without the need for the Government to "pick winners".
	We believe that electricity supply that produces no, and low, carbon emissions should be incentivised over those that produce higher emissions. So, for example, this would encourage development of methods for capturing carbon from gas-fired power stations where this, through technical development, can be made cheaper than investment in other low or zero-carbon sources. My noble friend Lord Dixon-Smith referred to tidal energy and other noble Lords referred to wind. We must foster an environment which avoids over-dependence on one or a small number of sources of energy. Of course, this might mean—several noble Lords referred to this—having new nuclear build in the mix. It is not properly renewable, but we have plenty of fuel here already and fresh supplies do not come from the same parts of the world as oil and gas. This would make us more secure and could also help us achieve our green goals.
	Electricity generated in smaller, more local units such as neighbourhood combined heat and power schemes needs encouragement. The noble Baroness, Lady Ford, referred to that. But the current regulatory framework is impeding the growth of decentralised energy; for example, making it difficult and costly for local generators to sell any spare electricity they generate back to the National Grid. This needs to change.
	Lastly, and of vital importance, we need to include energy security in our foreign policy. We sharethe concerns of many noble Lords and other commentators who are concerned about the reliability of imported fuels for our electricity supply. Yet in reality over the next 20 years we are likely to become more, rather than less, dependent on imported fossil fuels. We must forge strategic energy partnerships with energy rich nations and we must ensure that the infrastructure and storage are in place to protect us against the shocks which are certainly in store.

Lord Truscott: My Lords, I congratulate the noble Lord, Lord Tombs, on once again securing a debate on electricity supply. His annual "audit" of the Government's record on this issue is much looked forward to by noble Lords, and I have enjoyed listening to this informed and measured debate. I shall be disappointed if this is the last in the series.
	The noble Lord, Lord Tombs, and other noble Lords expertly outlined the main issues facing the electricity industry and I will discuss the Government's position shortly. However, I should first like to address the assertion that a strategic decision-making mechanism would in some way address the issues facing the electricity industry more efficiently than the system we currently operate.
	I will not repeat in detail the comments made by my noble friend Lord Davies of Oldham during the debate on this subject last year. He spoke of the Government's desire not to turn back the clockto a more centralised approach to energy markets. Indeed, noble Lords are aware that Her Majesty's Government remain committed to the UK's competitive energy market. This was confirmed in the recent energy review. We do not, therefore, believe that a strategic decision-making mechanism is either desirable or necessary. We see no reason to think that decisions by a single central authority would be any more successful in correctly identifying and providing what will be needed to meet the nation's energy demands than are decisions by industry professionals in a market where companies compete to do just that.
	It is an immensely complicated business, involving assessment of factors such as likely future demand, supply, fuel and electricity price, fuel availability, technological development, carbon prices and so on. In fact, all our experience has shown that a more centralised decision-making process could stifle the very incentives that encourage private sector investment. Without that investment the taxpayer would be left to pick up the bill. With statistics showing private sector investment of more than£12 billion in new generating plant since 1990, and more than £10 billion in gas infrastructure projects likely between 2005-10, this would be a very large bill indeed.
	As mentioned by several noble Lords, one of the issues facing the electricity industry is an increasing reliance on imports of gas, currently the main fuel for electricity generation. On security of supply, I refer to a point raised by my noble friend Lady Ford about the physical security of our installations. That is kept under constant review. I am sure that noble Lords will understand that I do not wish to go into further detail on that. Security of supply is in itself a major issue. Several noble Lords referred to Russia and Gazprom and their impact on the country. The Government remind the Russian Federation of the St Petersburg energy supply principles that it signed up to at the G8 in St Petersburg, in which it committed itself to open, competitive and transparent markets. There has been no Gazprom bid for Centrica or any other major UK company, so I would not wish to engage in a hypothetical discussion.
	Net imports currently account for some 10 per cent of the UK's annual gas demand. In 2010, a third of demand may be met from imports, but by 2020 it could be 80 per cent or more. That reflects our debate. A number of our competitors in Europe have, of course, relied on imported energy for many years, but we have been fortunate in our proximity to the North Sea's reserves of gas. However, we must face up to the fact that this good fortune will gradually come to an end.
	A number of noble Lords asked what action the Government are taking to secure our energy supplies. We are aiming to maximise our oil and gas reserves by boosting the attractiveness of investment in the UK, compared with other regions of the world, and that will help recovery from fields that are already producing an established infrastructure to the west of Shetland for our undeveloped heavy oil resources. HM Treasury is also discussing with industry the wider structural issues of the oil and gas fiscal framework, which will be important.
	Noble Lords mentioned on a number of occasions the need to ensure diverse sources of supply to reduce our gas dependency through energy efficiency. Her Majesty's Government and I would agree that that is an essential part of our strategy, looking at both the demand and supply sides. Improving energy efficiency is a core of that. That will also depend on improving the investment environment for distributed generation for renewables, for example, and for nuclear generation, if we go down that path when the White Paper is published. I will return to those issues in a moment.
	We are also facing the closure over the next two decades of about one-third of total generating capacity, as the noble Lord, Lord De Mauley, mentioned, including just under a third of the UK coal fleet, due to ageing plant and strict environmental limits. Included in this is the planned closure of a significant part of our nuclear generating fleet over the next two decades—equivalent to nearly 20 per cent of the country's electricity generation, as the noble Lord, Lord Redesdale, said.
	All that is set against the background of the urgent need to reduce carbon dioxide emissions. These issues were of course very much at the heart of the recent review of energy policy, which examined the UK's progress against the medium and long-term goals set out in the 2003 energy White Paper. As the noble Lord, Lord De Mauley, said, the review highlighted two major long-term challenges in UK energy policy: the need to tackle climate change by reducing carbon dioxide emissions, and the need to deliver secure, clean and sustainable energy at affordable prices as we move to increasing dependence on imported energy.
	While remaining committed to the UK's competitive energy market, our aim is to set theright regulatory framework to encourage and enable the market to move in the right direction to meetthe long-term challenges. Despite the many real challenges facing the UK's energy industry, it continues to deliver secure sources of energy supply. We have seen proposals come forward for new and innovative electricity generation, including clean coal and renewables projects, as well as a number of gas-fired stations. The noble Lord, Lord Dixon-Smith, rightly focused on the importance of heat. That issue will be taken up in the forthcoming White Paper. A number of noble Lords also mentioned the importance of developing combined heat and power plants; that, too, will be addressed.
	As I have mentioned, some £10 billion of actual and planned private investment in gas supply infrastructure and related transportation is likely between 2005 and 2010. Some of that is already bringing gas to the UK, leading to a welcome fall in wholesale prices compared to last year. Those gas import projects are potentially delivering gas from such diverse sources as Norway, the Netherlands, Russia, Algeria, Qatar and other liquefied natural gas exporter countries. The Government are working on a comprehensive programme to help these and future gas supply projects proceed in a timely fashion.
	The noble Lord, Lord Redesdale, was right to say that coal will remain an important part of our future energy mix. Last year, more than 50 per cent of our coal imports came from the Russian Federation. We are consulting on measures to reduce the regulatory burden for offshore gas infrastructure and onshore, and we are considering simplification measures in the context of the forthcoming planning White Paper. A number of noble Lords mentioned the importanceof planning issues in terms of large infrastructure projects and smaller-scale microgeneration projects. These issues are being looked at in detail, with regard to both the energy White Paper and the forthcoming planning White Paper.
	We have been supporting the European Commission in its efforts to enforce the energy liberalisation legislation and we welcome its recent sectoral inquiry into the operation of energy markets across the European Union. I welcome the support of the noble Lord, Lord De Mauley, for the European Union's efforts in that area, especially those of the Commission, to ensure the liberalisation of the EU's energy market. I can assure him that we fully support the strategic energy review recently published by the Commission and the findings of its sectoral inquiry—and we support the un-bundling of the energy market. Progress there would bring benefits to consumers right across Europe, just as consumers in the UK have already seen the benefits of competition in choice of energy provider.
	We have proposed significant measures in the energy review to reduce carbon dioxide emissions and to ensure the security of our energy supplies. We aim to encourage the use of cleaner energy and will continue to be steadfast in our commitment to long-term carbon pricing. I shall return to that issue, because it was raised by a number of noble Lords.
	We are seeking to boost renewable energy by strengthening the renewables obligation and tackling barriers such as planning. I agree with the noble Lord, Lord Redesdale, that we are aiming for a broad energy mix, not a one-solution fix to the future challenges of energy needs and tackling carbon emissions. We are looking at a broad range of energy sources and introducing renewables is an important part of that.
	The noble Lord, Lord Tombs, mentioned the importance of wind power, although he said that it was not enough in itself to solve our future energy needs. I agree that it is not enough on its own, but wind energy remains the fastest-growing renewable technology and in 2005 all records were surpassed on the amount of new wind capacity installed. As of January 2007, the UK had some 1,963 megawatts of installed onshore and offshore wind capacity.
	The noble Lord, Lord Dixon-Smith, mentioned tidal and wave power. We have a £50 million fund for marine renewables, £42 million of which has been earmarked to kick-start the construction of large-scale demonstration wave and tidal projects around the UK.
	The noble Lord, Lord Teverson, mentioned deep geological thermal production—otherwise known as "hot rocks". The Government are looking at a wide range of emerging energy technologies and at the scope they must play in meeting our carbon targets. So we are aware of the potential of hot rocks technology and will give it further consideration.
	We will also take steps to recognise the potential for distributed generation, which would enable us to generate energy efficiently near to where it is used.
	On nuclear energy, raised by a number of noble Lords, if we confirm our belief that it has a role to play in the UK's future low-carbon energy mix, when we publicise the energy White Paper we propose to address the regulatory barriers to, and reducethe uncertainty for, new nuclear investment. Unlike the noble Lord, Lord Jenkin of Roding, we welcome the Franco-British Nuclear Forum and collaboration, because we think that we can learn from each other about the work that is being done in this sphere.
	As I mentioned, we intend to refer to nuclear power in the White Paper, which, I repeat, should be published in March. Consultation on a proposed policy framework for nuclear build has just closed. This was the first step in the process of creating the right regulatory and investment framework to allow nuclear to compete with other low-carbon options.
	The noble Lord, Lord Teverson, said that he did not believe that nuclear power could be built without subsidy. However, it remains the case that any new build will be initiated, funded, constructed and operated by the private sector, which will have to cover the full decommissioning costs and pay a full share of the long-term waste management costs.
	Long-term issues were mentioned. CoRWM deals with waste management issues and last July produced a report which made the case for a deep geological repository to deal with long-term nuclear waste.
	The noble Lord, Lord Tombs, argued for a centralised body, such as the former Electricity Commission, to take forward policy on new nuclear build. Our energy review states, as I mentioned, that it remains the case that any new build will be initiated, funded and so on by the private sector. That is the Government's position, but the initiative for any new build will have to come from the private sector.
	A number of noble Lords, including my noble friend Lady Ford, mentioned climate change and the Stern report. That is the background to the whole energy review, combined with issues of security of supply and our future needs for secure and sustainable energy supplies. We agree that it is an absolute priority to tackle climate change.
	My noble friend Lady Ford and, I think, the noble Lord, Lord Redesdale, mentioned the restructuring of government ministries and asked whether there should be a Secretary of State for energy. Of course, historically there have been Secretaries of State for energy, but I can tell noble Lords that energy is one of the key issues for the Government from the Prime Minister downwards, regardless of the machinery of government—and I'll leave it there—which I think is sufficiently sweeping.
	I assure your Lordships that Her Majesty's Government take very seriously the difficulties faced by consumers, particularly those on low incomes, due to the current high energy prices. Increased gas supplies to the UK, combined with lower demand due to relatively mild weather, have so far resulted in significantly lower wholesale gas prices compared with last winter. However, many customers are still facing high energy bills. Ofgem has said that it will keep a close eye on suppliers to ensure that there is no undue delay in passing on any sustained reductions in wholesale prices. I very much welcome that.
	The noble Lord, Lord De Mauley, mentioned price rises. The noble Lord, Lord Redesdale, mentioned Centrica's announcement of a price reduction, which will come into effect on 12 March. I am pleased to see that one or two suppliers are announcing their intention to reduce their prices and I look forward to more companies following suit. In that, I agree with the noble Lord, Lord Redesdale.
	Affordable energy, particularly for the more vulnerable in our community, is of key importance. That is why we have taken a number of important measures in this area. Warm Front, and its equivalents in the devolved Administrations, is the Government's key programme in this area. It provides free central heating and insulation measures to all qualifying households. The Government also provide all pensioner households with winter fuel payments of £200 per year to those over 60 and £300 to those over 80. Other benefits, such as pension credit, are also available.
	Where decisions could be made, we made them, but the energy review also announced a long-term package of proposals where further work was required. An intensive period of public consultation will help to formulate our position on a range of energy issues to be published in the energy White Paper. Essential to the measures will be allowing everyone to be confident of being able to heat and light their homes.
	I shall refer to one or two specific questions that were raised. I had brief notice of the question from the noble Lord, Lord Jenkin, on carbon trading, although I did not have the detail. We are committed to strengthening the EU Emissions Trading Scheme and we agree about the importance of carbon pricing. We also agree that there is a need for certainty on this issue, and we are looking at that. The Government are mindful of the need to give investors more certainty about the carbon market as soon as possible, and we will work with the Commission, other member states and internationally to achieve that.
	The noble Lord, Lord Redesdale, mentioned carbon capturing and storage. Again, this issue is being examined—

Lord Jenkin of Roding: My Lords, I am sorry. I feel that that was a totally inadequate answer to a question of which I gave the Minister's private office detailed notice two days ago.

Lord Truscott: My Lords, I shall write to the noble Lord. There are two issues here: first, I did not have details of his question, only the subject area; and, secondly, because time is pressing—

Lord Jenkin of Roding: My Lords, the noble Lord should deal with his private office.

Lord Truscott: My Lords, I shall write to the noble Lord, Lord Jenkin of Roding, with a full answer to the points that he raised in the debate. However, given the time and given that other noble Lords are waiting to debate other issues, I am afraid that I must press on. Other noble Lords may be similarly dissatisfied that I have not answered the points that they raised, so I shall write to those whose questions I have not been able to answer in the time available. Finally, I hope and anticipate that the energy White Paper will be published in March, and I look forward to discussing it in detail in your Lordships' House then.

Lord Tombs: My Lords, as usual, we have had a stimulating and wide-ranging debate, and I want to pick up one or two points that particularly seem to call for comment.
	First, I thank the noble Baroness, Lady Ford, for her contribution and I congratulate her on her antecedents, which are of course impeccable, just like mine. I also take the opportunity, as she did, to commend Ofgem for its recent performance. It has become very good. In the past, that has not been the case; for example, it introduced NETA and almost bankrupted several generators in the process, and it also created a wholly artificial nuclear crisis by doing so. But it has been getting better.
	Noble Lords will be pleased to know that I shall be very quick in going through the various points. The noble Lord, Lord Jenkin, referred to Lord Peyton, as I should have done, and I take this opportunity to associate myself with his comments. Lord Peyton was a constant and useful contributor to these debates and he is greatly missed.
	I also associate myself with the noble Lord, Lord Jenkin, and other noble Lords who are concerned with CO2 cost-predictability—an important point. One structural problem that we had was that we do this in common with the EU, which generally tendsto play all games better than we do, as do the Australians.
	The noble Lord, Lord Teverson, raised the difficulty of getting planning permission for windmills, whereas the country is strewn with transmission towers. His comments reminded me of an occasion in Scotland when I had to meet the government adviser on the environment, as I was required to do once a year. This gentleman, an architect, said that he did not really object to having transmission lines; it was the wires in between that irritated him. I replied that, frankly, we were not clever enough to manage without the wires but, if we could, I wondered how long it would be before someone came along and asked for a unifying motif. Beauty is in the eye of the beholder.
	The noble Lord, Lord Teverson, also mentioned hot rocks. I had some experience of very hot rocks in a geothermal station in New Zealand, which I was responsible for building. I am not sure that the opportunity even exists in this country; perhaps that is just as well.
	The noble Lord, Lord Dixon-Smith, was a little puzzled by my comments on this being the end of this series of debates. I did not mean to suggest that I was giving up the baton, simply that the question of strategy in the electricity industry has now beenfully ventilated. The Government have had every opportunity of taking up the sensible arguments that have been made but have chosen not to do so. I therefore see no point in continuing it. I hope, as I am sure other noble Lords do, that the visit of the noble Lord, Lord Dixon-Smith, to Russia is a brief one. If he persists in criticising them to the extent that he has today, it may not be.
	The noble Lord, Lord Redesdale, embarked on our customary argument—which ultimately always comes down to nuclear power. I do not know where his figure of 13 per cent losses on the grid came from. I speak from wide experience when I assure him that that is quite wrong; it is much too high.
	The noble Lord, Lord De Mauley, again mentioned Ofgem. Ofgem is doing a useful job but it is not able to do other than deal with current market forces. It is neither equipped nor able to take a long view beyond current market requirements. That need remains, and the Government's pretence or belief that a statutory body is not necessary is very hollow. There is a strategy of a kind in the Government but it is not significant. The Government will remind Russia about the need for the agreements we have. I welcome that and hope that it will reinforce consumers when they lose their supplies.
	I thank noble Lords for taking part in this debate and for their support in previous years. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

Channel Tunnel

Lord Dykes: rose to call attention to the present financial situation of the Channel Tunnel; and to move for Papers.
	My Lords, I am grateful for the chance of raising in the House today the recent judicial decision reached in France for the rescue plan for the Channel Tunnel. I am also grateful that other noble Lords have come along today to join in this discussion. I am especially grateful to the Minister for being present.
	I must declare an interest, both emotional and literal. I was long a fan of this wonderful and amazing project. I am an amateur train buff anyway, and especially pleased that the original plan was accepted as "trains only". I also had the privilege of riding on the inaugural Eurostar passenger train in May 1994, when the tunnel was officially opened by Her Majesty the Queen and President Mitterand of France. Finally, my family seem to have a minuscule residual shareholding which was left behind in a reorganisation of some portfolios a long time ago, too small to qualify for fare reductions, but the shares in their old form are suspended anyway because of the recent crisis.
	Although this debate should logically focus on the details of the court decision at the Paris commercial court, some noble Lords may inevitably wish to raise matters of transport, train and freight policy. I heartily welcome that; it fits in with the debate, as well as consideration of the future perspectives for the company in its new form. Not least, I notice the noble Lord, Lord Berkeley, in his place. No one in the whole country could be more of an expert in these complex matters than him. I am also grateful to the noble Lord, Lord Harrison, for coming in today, with his European expertise. Although this is a bilateral project, it has a European emotional flavour and is part of the overall trans-European network plans, even though it has not thus far received any European money directly.
	I supported the original plan for many years, as an enthusiastic supporter of the need for France and Britain to get even closer. I declare an interest as a regular shuttle user, going at weekends to where we have now lived for quite a few years in Normandy. I also supported it as a keen European, hoping that the physical linkage to the Continent would help to dissipate some of the last vestiges of our irritating and unnecessary insularity in this country. Indeed, that positive psychological effect has taken root among the public in general. Agreeably, it has helped thousands of mainly young French professionals, but older ones as well, to commute regularly or live and work in the UK as executives and in other professions and activities; they are estimated as some 350,000, but no one has exact figures.
	I was therefore always very frustrated and dismayed that the project start was delayed for some time, with prolonged negotiations between the two Governments, the original earlier plan having been suspended by Tony Crosland anyway; a painful memory. Much time was wasted. When the scheme was agreed after many complex discussions and the Thatcher Government insisted on the project being in the private sector, the French authorities could not believe their ears. An ideologically right-wing Government in Britain was adamant, and especially suspicious of the devious ideas of the fairly new French socialist Government of Monsieur Mitterand.
	As we remember, the then British Government were quite happy to use unlimited taxpayers' money on endless new motorways—with no tolls of any kind for gas guzzling Jaguars and, of course, heavy lorries to use on a heavily subsidised basis—but, "Oh no!", there could be no public money available for what was and is still the greatest single transport link in the history of the world. Fortunately for the project itself—because otherwise the project would not have got going—the President gave in. It was unfortunate, however, for the form and shape of a hugely expensive costs and debt structure which no normally viable private company could have managed. It was the biggest privately funded infrastructure project for transport linkages at that time; it probably still is, although the figures can always be argued about.
	The way that the French Government gave in reflected their anxieties. The Nord Pas de Calais department was at that time a depressed area, with massive closures of textiles, mines and other old industries, with little to compensate. The British Prime Minister was happy to fund the entire Docklands preparation scheme with public money only—the famous pump-priming exercise mentioned by Mrs Thatcher—and equally happy to prepare major UK entities for lucrative privatisations with massive cancellations of private debt to make them attractive share prospects. That was all regarded as okay. I recall, incidentally, that the entire development costs of the Concorde project were borne by the public sector account, allowing right-wing businessmen to travel faster to New York for unnecessary meetings. Many journalists at the time thought that this revealed the Thatcherites' emotional antipathy to trains as a concept, as often reflectedand commented on at the time by the well knownMr Robert Adley, MP.
	True to quite realistic expectations, the final construction costs were hugely in excess of original estimates. The original company and the revised company never had the slightest chance of paying off the debt and interest accumulations. As noble Lords may recall, the Eurotunnel company has now undergone debt refinancing and restructuring on a number of occasions, with the banks getting increasingly alarmed and difficult as the company's future looked more and more shackled.
	Thus was this, the first and only major Europe-wide infrastructure project, set up for its inevitably shaky career, from the original equity fundraising from founder shareholders and institutions, to the public flotation in November 1987 raising nearly£800 million, mainly from the British and French. There were subsequent issues of equity in November 1990 of £566 million, another in May 1994—the opening—of just over £800 million, and then a further £160 million at the end of 1999. Meanwhile, the banks put in £5 billion in November 1987,£1.8 billion in October 1990, nearly £700 million in 1994 and £740 million in 2002; good business indeed. Over that period, various short-term advances by the banks were converted into bonds.
	At the end of 2005, total net debt reached£6 billion, with £240 million of contractual interest charges for a company with an annual revenue of about £500 million. As we were able to observe over the years of pain and travail, with the excellent physical train operations contrasting with the Byzantine debt burden, the centre of gravity ofthe downtrodden equity shareholders moved substantially from the UK to France and elsewhere on the Continent. Ironically, this has helped to save the company from extinction.
	In April 2004, a revolt of French registered shareholders at the AGM ousted the entire board and a three-year recovery plan was announced in the following October. Prolonged negotiations for a debt-for-equity swap were launched, and the new chairman, Monsieur Jacques Gounon, rejected the banks' initial standard terms for negotiations. As the complex talks unfolded, it became clear that a major cancellation of the by then colossal £6.4 billion debt would be needed. Monsieur Gounon also decided bravely to resist the debt-for-equity dilution that would hit hard at the long-suffering shareholders and courageously advocated two-thirds debt forgiveness. With an agreed-terms waiver in place to keep the creditors at bay temporarily, the chairman decided to postpone the results in the spring of 2006. He also decided that Eurotunnel had cash flow only until the end of that year and if the debt holders did not like the rescue proposals, they would have take over the running of the company. There was no other solution.
	The ad hoc committee that had been createdsigned the memorandum of understanding for the restructuring plan by May. The plan was also bolstered by the financing commitment of a group of lenders led by Goldman Sachs and Barclays Bank. A preliminary agreement was signed in May 2006 asa binding deal that would help the company to continue. It was then rejected by the lowest tierof bondholders—Deutsche Bank proved to be particularly difficult in this context—so the company had no choice but to apply for bankruptcy in July because the final waivers had expired. Eurotunnel initiated legal proceedings to place itself under the protection of the commercial court of Paris under the procédure de sauvegarde of French law. The request for bankruptcy protection was granted at the beginning of August last year. The court appointed two judicial administrators to assist in securing agreement from the joint board and creditors on a restructuring plan.
	In October 2006, in accordance with French procedures, Eurotunnel sent out its draft safeguard restructuring plan on which creditors were required to vote. Under the new proposal, Eurotunnel's debt would be reduced from more than £6 billion to£2.84 billion, leaving existing shareholders with 13 per cent of a new, restructured company called Groupe Eurotunnel and creditors with the remaining 87 per cent. The plan received approval from a majority of creditors in two separate votes on 27 November and 14 December, although various objections were raised by creditors on technical matters. On 15 January, the court rejected appeals from creditors opposed to the plan and approved the safeguard restructuring plan. Eurotunnel now needs to persuade 60 per cent of shareholders to surrender their shares for conversion into stakes in the new, restructured company—that percentage is regarded as desirable, but is not compulsory. I am glad to say that after all these dramas the creditors voted positively on27 November—72 per cent of the total senior and junior debt. I am sad to say that some foreign hedge funds stayed away from those decisions. The effect was to leave the creditors with 87 per cent and the equity holders with 13 per cent of Groupe Eurotunnel SA. The bondholders' vote followed, and in mid-December 82 per cent of them voted to approve the arrangement.
	Two years of intensive negotiating and wrangling had produced not only the common sense outcome but the only realistic outcome. It was good at last to see Deutsche Bank coming back on board, so to speak, in the consortium for the new debt configuration with Goldman Sachs, Citigroup and others. The board now feels that the repayment schedules for capital and interest appear to be sustainable and manageable on current cash flow and revenue expectations from a market which, in respect of its two priority services, is reaching a mature stage because of physical capacity limits. However, there are freight possibilities and options, which I leave to other noble Lords to raise today, if they wish.
	The long-suffering shareholders can finally allow themselves a small glass of champagne now that the Paris court has approved the safeguard plan, which has full legal effect. The 2,300 employees can do the same. They have been patient and stoic, and accepted a one-third cut to put the company on a lower cost basis. A new listing will be arranged in the two countries this year. There will be an exchange tender offer for the old companies and tier three debt holders will enjoy a cash or shares option in due course. The chairman and chief executive, Jacques Gounon, reminded any further potential troublemakers among the creditors that, even if there were legal appeals against some of the provisions, the court's decision is binding on all parties to the agreement.
	He and his colleagues showed great resilience and imagination, and I was amused by the churlish reluctance by sections of the British press, led by the Financial Times, to praise the agreement. They never used to grumble when this kind of debt cancellation was being done in Britain to put companies in a healthier shape. There is not much difference, except that French law protects employment and jobs. The decision the court reached could not have been reached in a British court under British legislation, so we have to thank the French for having moved in and rescued the company. The shuttle service and Eurostar are now announcing optimistic forecasts of business growth.
	The whole saga has been interesting to observe in detail. Millions of passengers, car drivers and truck drivers who have used the tunnel since 1994 can reflect that it took Gallic common sense and fair play to overcome the mistakes made in the 1980s by dotty and arrogant Thatcherites, who saddled the company with an impossible debt mountain. I beg to move for Papers.

Lord Harrison: My Lords, I thank the noble Lord, Lord Dykes, for opening this debate and for his kind words to me as a fellow supporter of Europe. He mentioned that the Channel Tunnel was a bilateral project, but my view was always that the balance of advantage was with the United Kingdom because it meant that we would have access to the whole of the European Union and belong, whereas the EU had access only to us, delightful as that may be. Although I do not see the noble Baroness, Lady Thatcher, in her place, while I am handing out compliments I should say that I always thought of this as her grand projet. She was not one for grands projets, but I admire the way that she drove this project forward.
	The basis on which the project was done and the estimates that were made at the time were less than satisfactory. The costs were underestimated and the projected income was overestimated. I am pleased that these days we have PFI to try to remedy the mistake—which has happened throughout the ages—of underestimating costs on big projects. I am reminded that the House of Lords over-ran its budget tenfold when it was built in the 19th century. That is forgotten today because of the splendour of the building that we have. Before I leave this topic, I say to the Minister that when we are trying to estimate the cost of anything we ought to use the old playground technique of thinking of a number and doubling it.
	A big glass of champagne should welcome the debt restructuring plan. As the noble Lord, Lord Dykes, noted, 2,300 employees will rest the better, as will the shareholders. With the backing of Eurotunnel's creditors, it paves the way for Eurotunnel to leave bankruptcy protection, which I understand is the French version of Chapter 11. It also allows the new Groupe Eurotunnel to make a share-swap offer for the French and UK share units of current Eurotunnel companies, and I understand that Eurotunnel shares, which have been suspended since last May, will start trading this month. Perhaps my noble friend can update us on that.
	I have some questions. We were encouraged by the noble Lord, Lord Dykes, to talk about ancillary matters. I welcome the development of St Pancras as the terminus for Eurostar in future but, because of the financial problems that have been experienced, I am less certain that we should phase out Waterloo. I should have thought that London was well capable, and should be capable, of supporting those two points of boarding. Does my noble friend have anything to say on that?
	Furthermore, as the green agenda rises in political concerns in this country and, indeed, across Europe, to what extent does that bring into sharper focus the problems experienced by Eurotunnel, and should we in the United Kingdom take a greater interest in these matters, especially as we are now front-runners in trying to reduce CO2 levels in our own country as well as throughout the European Union and in the world more widely? Incidentally, the European Union Select Committee habitually takes the tunnel to go to meetings in Brussels, where it is very good to talk and to act on these environmental issues. I notice that the noble Lord, Lord Berkeley, is in his seat. I very much admire the decision made by the Rail Freight Group to go by train on a future visit to Holland and not to take advantage of flights. We must have this increasing use of trains to try to contribute to reducing CO2 levels.
	I have some final questions. As the noble Lord, Lord Dykes, said, chairman Jacques Gounon has been seeking concessions from the British and French Governments on lower regulatory costs and lower licensing costs. Has my noble friend or his colleagues talked to the French Government about that? What is their attitude to that request, especially bearing in mind what I said about the importance of trying to move the green agenda up the political agenda?
	Secondly, do HMG have a view on the minimum user guarantee income charge, which was agreedin 1994 for 12 years, and whose withdrawal, as I understand it, precipitated the current crises? Are we contemplating any help? Finally, I draw attention to Eurotunnel's Eurotunnel on Track, a publication that came out in 2007. Much of it is good news. It states:
	"During the year more than 2 million passenger vehicles and 1.3 million trucks were carried on Eurotunnel Shuttles. These results, which are above the forecast in the business plan, allow me to be optimistic about the future".
	It is true that the revenues have gone up by 5 per cent, but that is interpreted by the fact that they have a targeted higher yielding business. Behind these figures is the fact that actually car numbers have gone down by 1 per cent, truck numbers have gone down by 1 per cent and coaches, which I do not think are mentioned in this publication—I may be wrong about that—have gone down by 12 per cent. That is a little disappointing, and it puts a gloss on these figures which we need to look at more closely and understand better.
	As I mentioned before, a glass of champagne is required. We seem to be on track. I hope and believe that Her Majesty's Government should take a very close interest, and if help is needed it should be well considered and thought about.

Lord Berkeley: My Lords, I declare an interestas chairman of the Rail Freight Group. For about15 years I worked on the construction of the Channel Tunnel—not, I should say, on the financial side. I congratulate the noble Lord, Lord Dykes, on getting the debate. It is time we had a good airing of the subject of the Channel Tunnel. His support over the years—I remember when I worked on the project—was very important along with that of other European Parliament Members, and I think that my noble friend Lord Harrison was there too. Having political support across not just Britain and France but the whole of Europe was extremely important.
	My noble friend mentioned the noble Baroness, Lady Thatcher, who was a great supporter. Without her, as was said, it would not have happened. Of course, by the time we got half way through the construction we felt that we were building her project to the country which was her greatest enemy at the time, but that is how things change. Anyway, it is great that she got it started.
	It is good that the French changed the law so that Eurotunnel could survive. It would be nice if we could change laws just like that so quickly, but that is not the way it works. Noble Lords have mentioned costs. It is important to get the definition and the reason behind the cost increases into perspective. There seemed to be a hurry about getting this project going for various reasons. When the finance had to be committed the civil engineering design was virtually finished, and the fixed equipment design was not so finished but it was there, but the rolling stock forthe shuttles had hardly started. As a result, the costof the shuttle design probably trebled, largely because of the needs and wishes of the various safety people involved. They had a blank cheque because the project was committed. The lesson there is that the Channel Tunnel civil engineering was on budget, fixed equipment was a bit over, and the rolling stock just about killed it. That is because the project finance was committed before the design was finished. We all should remember that—get the details right first.
	Forecasts are always difficult, as we find on many other projects, but certainly no account was taken—maybe it could not have been—of the competition from the ferries or the low-cost airlines. Therefore, the Governments used the back-door of a contract with the two nationalised railways, as they then were, to guarantee a certain amount of revenue regardless of whether the trains ran. That was called a usage contract and, as my noble friend said, the minimum usage charge, which was payable by both railways to get Eurotunnel off the ground on the financing side, finished at the end of November—a matter that we can come on to.
	We now have a 50-year contract with the railways—the British half was sold on to EWS Railway, which is a private sector company—with the rates fixed. The airline industry having rates fixed for 50 years is unimaginable. This complete anomaly is,I believe, illegal under the open access directives, but it is why very little freight is going through. BeforeI get on to freight, I would like to remind noble Lords that this is not some glorious nationalistic emblem connecting the UK to the rest of Europe; it is an ordinary rail tunnel. If we were able to look at it in those terms, we might not get quite so hung upby all the requirements of the intergovernmental commission, its safety people, its security people and everything else, which are used by everybody as an excuse not to do anything and to add costs. They add a lot of costs. My noble friend is absolutely right; getting some of these reduced will certainly help Eurotunnel.
	When I was working for Eurotunnel we virtually managed to get a sleeper service going through the tunnel using mark 3 sleepers, which are the ones that go to Edinburgh and Penzance today. The safety authority said, "All you have to do is put stronger springs on the doors". We also tried to encourage the regional Eurostar service to use them by day and to get the Gatwick-Lille service, a Thameslink train with very little change in terms of safety. That is how you get more traffic and more competition through. The rules currently say that if you want to have extra or new types of locomotives they must be very special. This is when the rest of Europe is trying to standardise locomotives, signalling, traction power and everything else, so if anybody wants to get a train through this tunnel they can.
	I remind noble Lords that the Swiss are building two tunnels under the Alps about the same length—two, not one, at the same time—and there is none of this rubbish. All trains that will be allowed to run on the Swiss track will be able to go through these tunnels. The first, the Lotschberg, opens this coming autumn. Maybe our rail group should visit it next year. But we make life difficult for ourselves with all these petty regulations which do not seem to have much benefit.
	When the tunnel opened, the forecast was that 6 to 8 million tonnes of freight a year would pass with40 trains. Since then, we have had the illegal immigrants, who trashed the containers and the trains. When trains arrived at the terminal, staff found people with knives coming out at them. For two years, the two Governments refused to increase security on the trains and at the terminals in France and said that that was a problem for the railways. Since when have railway personnel been frontier police? I have said that in the House before. It is a bit as if the German railways were asked to police the Berlin Wall, when it was in existence. The German railways are very good, but their staff are not trained as frontier police.
	So customers got very angry and fed up. That is why traffic has reduced from between 15 and 20 trains a day to about three or four at the moment, when UK domestic rail freight has risen by 60 per cent. It is four times down on the Channel Tunnel and 60 per cent up in the UK.
	Eurotunnel has published a network statement, which is the document that is supposed to comply with the open access regulations mentioned by my noble friend. The regulations cover access rights, charges and so on. The real problem is the charges. The charges for a train vary between €6,300 and €17,000 a train. The low figure is not bad; the high one is just impossible. The low rate applies to trains that travel at 140 kilometres an hour—none exist in the world except in Europe—and to trains running at night, when the tunnel will be closed for servicing, so that does not work. Call it €12,000 as an average. Eurotunnel does not justify the wide variation in charges, which are supposed to be there only if the infrastructure is congested. It has not been declared congested; it is not and will not be, the way that Eurotunnel is going on.
	Eurotunnel should be complying with the Channel Tunnel (International Arrangements) Order 2005. In Article 11, it basically says that, with freight, you should start with the marginal cost. Projects which cost a lot of money can increase the charge, but you must take into account performance, the possibility of reservation charges and so on. Eurotunnel is way out of line with the article. It is not good enough for people to shrug their shoulders and say, "There is nothing we can do about it because these people are in the private sector". The requirement is quite clear that if there is a higher charge, it must be,
	"to increase the efficiency or cost-effectiveness of the project",
	to cite the order.
	I do not know whether the Minister can tell me whether that applies, or whether we just go on as we are. If the charges remain as they are, there will be no rail freight by the end of the year. I have been trying to tell people in Eurotunnel that under first-form economics, in a market economy, if you put the prices up you are not necessarily going to get the revenue up. You might actually have no revenue. If you put the prices down—for example, if you halve the charges, as it has at the moment—you will probably get three times the traffic, so the overall revenue will be greater. Until we can get it to agree to that basic philosophy, it will be quite difficult.
	The other way to get more rail freight throughthe tunnel is competition, to which my noble friend alluded. The Government did well in sending a letter in December, basically saying that the capacity through the tunnel should be shared with other operators and must be ring-fenced and that locomotives must be made available. That was a good letter. It is available in the public domain, so I will not bother to read it out. But that is not enough.
	As other noble Lords have said, the trucks trundling up the M20 could fill 200 trains a day, and probably half that number from the trucks on the M1 and M6, which would mean that the motorways were a great deal more pleasant to drive on. There would be a great deal less pollution, noise and everything else. There is plenty of capacity on the lines—on the Channel Tunnel rail link and on existing lines in this country. Even if there were only 100 trains a day, compared with four at the moment, that would save quite a lot.
	For that to happen, two things need to be achieved. One is lower prices through the Channel Tunnel,for which Eurotunnel needs to comply with the regulations. The other is competition between operators. The Government can and must assiston both those issues. The intergovernmental commission, which is half UK Government and half French Government, could take action against Eurotunnel for non-compliance. As in all these things, the first thing is to threaten action. If a company has any sense, it will start talking, and I hope that Eurotunnel would. Legal action would take a long time and be expensive for everyone, but the threat must start.
	The Government can also encourage competition. They must make sure that there is a market. They must reduce the barriers to entry, remove all the safety requirements for locomotives, as for the Swiss tunnels, and everything else. Do we need all the security that we have at the moment? The security in the Channel Tunnel is much more stringent than for the trucks going across on ferries. I was going to ask: do we need an intergovernmental commission at all? We probably need it just for the treaty between the two countries, but do we need all the subgroups that sit around having lots of meetings and costing us all a great deal of money? What are they achieving in safety, security or anything else that could not be achieved in the normal run of things?
	The Government have the power and opportunity to set the framework for traffic to grow. In the next few weeks or months, we must see whether they will do that and grow traffic at a rate to catch up with the Swiss tunnels, which will be full almost from the day that they open, or whether they will let it die. It is a government issue, not just one for the private sector.

Lord Bradshaw: My Lords, like the noble Lord, Lord Dykes, whom I congratulate on obtaining this debate, I am a small shareholder in Eurotunnel, but I do not anticipate that I shall be partaking of the champagne; I do not own that many shares.
	In 1993, it was forecast that between 6 million and 8 million tonnes of freight would pass through the Channel Tunnel. In 2007, 14 years later, a mere three or four trains are passing in each direction—probably carrying well under a million tonnes. Even recently, the numbers have been further reduced because there has been a 24 per cent increase in charges on all freight passing through Europe and the Channel Tunnel, which is far too great a rise for businesses to succeed. Unilog, one of the companies running trains through the tunnel until recently, has gone out of business.
	There is provision for 40 trains a day in each direction. The noble Lord, Lord Berkeley, referred to estimates that there is potential for 200 trains a day, given the traffic that is passing by the ferries and the shuttle services. There is supposed to be open access across Europe for freight, and track access is supposed to be on a marginal basis, except where expensive infrastructure is involved, where the infrastructure manager may add a premium. But he must not add more than the market sector can bear and he must demonstrate what additional costs are imposed by, in this case, the freight traffic.
	My first question for the Minister—I hope that we shall get some answers today, rather than the letters that we were promised in the previous debate—is: do the Government accept the European Union open access directive for freight passing through the Channel Tunnel? The UK is, I believe, a party to the directive, but do the Government really accept it and will they enforce it? Does the rail user contract within Eurotunnel take precedence over it? If so, how do Her Majesty's Government justify that? In my view, open access legislation has precedence in this case. The rail user contract and Eurotunnel's pricing mechanism should not over-ride the undoubted environmental benefits that spring from increased rail usage, to which the noble Lord, Lord Harrison, drew attention.
	I shall tax the Minister with this theme in many questions that I ask now and in the future. Every line of government expenditure and every decision that the Government make should be underlined by an environmental theme. What enforcement action will the intergovernmental commission take against Eurotunnel? Probably very little, I think, as it is a somewhat toothless body.
	The Channel Tunnel has capacity for 20 standard train paths every hour, which, with some investment, could be increased to 24. However, well under 50 per cent of this capacity is used, despite the fact that the tunnel has been open for 14 years. That must be an indictment of the policies pursued by the French and British Governments. The Channel Tunnel is an underused asset. Although it is privately owned in theory, the taxpayer, both in France and in this country, subvents it, and it should be operated in the public interest and not in private interests.
	The noble Lord, Lord Berkeley, referred to haulage. Of the locomotives that are suitable for use in the Channel Tunnel, EWS—English Welsh & Scottish Railway—has the lion's share, which it must make available at "commercial rates". I am puzzled about what that actually means. SNCF has a few locomotives and I believe that Eurotunnel also has some, although I do not think that it uses them. Do the Government have solid plans to open this market to competition? If so, what are they?
	Competition in locomotive supply seems quite possible. Reference has been made to the tunnels in Switzerland and to the tunnel between Austria and Italy. The locomotives that go through those long tunnels are subject to the same precautions against fire and accident as locomotives that go through the Channel Tunnel are, so there seems no good reason why those locomotives should not go through the Channel Tunnel, too—they use the same electricity voltage. If those locomotives were made available, that would loosen up the market and perhaps attract some of the potential freight traffic to the Channel Tunnel. Will EWS be required to publish the commercial terms on which the locomotives willbe made available? Who will judge whether theseterms are reasonable—the Government, the intergovernmental commission, the Rail Regulator or the European Commission?
	Since December 2006, the Government have been paying Eurotunnel £6.1 million per annum. How long are we going to pay? The noble Lord, Lord Berkeley, mentioned the year 2051. What are we actually paying for? Is it so that freight can use the Channel Tunnel? In my view, we are paying a lot of money for the three or four trains each way that go through the tunnel. Apparently, the money is to compensate Eurotunnel for its operational costs, which I believe must be precious few. If hardly any trains run, what is the money for? What of the charges levied by SNCF and EWS at each end of the tunnel for so-called safety checks? What do these entail? Is a simple walk round a train worth the £1,000 that I believe is charged for it? I hesitate to think so.
	The Channel Tunnel rail link is a public asset into which the Government have put considerable funds. What provision for freight has been made on this line? I believe that there are some loop facilities on theline, but, as the noble Lord, Lord Berkeley, said, apparently no paths will be available during the day for freight. Why not? This line is not so different from the west coast main line. I admit that the Eurostar trains go fast, but there are not many of them and there are big gaps in between. The purpose of loops is to enable you to use the line and I believe that it should be used. The Minister should bear in mind the fact that this is the only way in which continental-gauge rolling stock can reach the terminal at Barking. He could refer to the fact that freight trains could trundle around through Kent by various circuitous routes, but the rolling stock would not be able to follow—in fact, the locomotive would not get there, either, because the gauge is not suitable.
	When the Government handed over the £6.1 million to Eurotunnel and put lots of money into the Channel Tunnel rail link, were they a knowledgeable buyer? Did they know what they were buying, or were they spending taxpayers' money without realising what was being purchased? Have the needs of freight as well as passengers been fully considered? Have the needs of the market and users been fully taken into account?
	On the subject of passengers, I wonder whether the Government have considered giving a directive to Ministers and officials to follow the example of the noble Lord, Lord Harrison, and his committee, so that, when they are travelling to Paris, Brussels and other near European destinations, the train will be their mode of travel except in the most exceptional circumstances. The Government need to give a lead. It is all very well pontificating about climate change, but we want to see a bit of action.
	We on these Benches want the Channel Tunnel to be fully exploited, opened to competitive operation and used to keep our roads and airports clearer. The asset exists. The maintenance and operating costs of the tunnel are very low. Unlike the noble Lord, Lord Berkeley, I am not a civil engineer, but I think that as a civil engineer he would say that, now that the tunnel has been built and equipped, it is very cheap to maintain because very little goes wrong with it. We could, as he said, lower costs by undertaking a thorough examination of all the commissions and their sub-committees and working groups that exist to regulate and police the activity. As far as I can tell, the Swiss do not seem to need all those bodies to regulate their tunnels.
	We want a link like the Oresund link over the narrow entrance to the Baltic between Denmark and Sweden. It is easy to use and not too expensive for the market—and it is the market that dictates the price that people will pay. We could set whatever rates we liked and say that we will charge a huge price, but in fact it is the market that sets the rates. In Scandinavia, the link is recognised as a showpiece. When you go to either side of the Oresund, to Malmö or Copenhagen, you can see the positive effects of the link on the economy on both sides of the water.
	The use that is currently being made of the Channel Tunnel is an awful indictment of the Government. I fear that the Government are locked into worrying about the financial effect on the banks, rather than thinking about the effect on the British public.

Baroness Hanham: My Lords, first, I apologise to the House for the absence of my noble friend Lord Hanningfield, who has been stuck in the snow—I hope not on a train. I am extremely grateful to the House for allowing me to stand in for him. I also thank the noble Lord, Lord Dykes, for generating this debate. I feel like a great amateur among the professionals. There was a short spell in my life—I have been struggling to remember exactly when it was; I think it was in the early 1990s—when I spent a remarkable amount of my time discussing rail freight and the tunnel, when Eurostar was first formed. I long to ask the noble Lord, Lord Berkeley—he may be able to tell me afterwards—whatever happened to the piggyback trains. We were very engaged by the fact that trucks were going to be able to drive straight on to bogies and go straight through the tunnel, thereby ensuring that a great deal of freight went through the tunnel from all parts of the country. Perhaps that happens a little now. It would be quite nice to know whether it does; it would take me back a great many years.
	As a frequent traveller on Eurostar, mainly to Brussels but occasionally to Paris—I have no other monetary involvement in this process—I am a committed advocate of the value of this service and the great advantage which this country in particular has gained from the vision that saw the tunnel constructed. I thought that the noble Lord, Lord Dykes, was just a little churlish about the role that my noble friend Lady Thatcher played in bringing the tunnel into being, and I was very glad that his points were somewhat redeemed by the noble Lords, Lord Harrison and Lord Berkeley, who at the very least recognised that it would not have happened without her.
	The movement of people and goods, although obviously not as great as originally anticipated—I have to say that whenever I travel on Eurostar, it seems to be packed to the gills—is significant. The journeys are convenient and comfortable, and the timing is always excellent. As has been said, Eurostar is a more than adequate alternative to having to battle at the airport. So it is a shame that the financial position of the Channel Tunnel is, and has been, so perilous. This has always been a flagship project with the potential to boost our national prestige, and one that is valuable to our relationships with Europe. But it has been marred by repeatedly flawed forecasting and a perceived lack of prudence on many occasions by the various management teams. The Government's involvement has been erratic due to inaccurate passenger number forecasts, which, when coupled with an ambivalent attitude to the potential benefits for the public, has resulted in poor returns on the capital employed. However, in light of record passenger numbers in 2006, I hope that there is light at the end of the tunnel and that Eurotunnel now has a prosperous future. I agree, however, that the under-use of the freight capacity remains a concern, as freight would generate considerable revenue.
	I do not expect to be able to emulate the analysis given by the noble Lord, Lord Dykes, of the whole process of Eurotunnel's financial difficulties, but it is a sad fact that Eurotunnel's management of the whole project from the outset has been mired in difficulty. This has culminated in the Paris Commercial Court's backing for the re-structuring of the company's colossal £6 billion debt. That this debt was accumulated in the first place signifies the firm's woeful performance in bringing in and regulating the investment required for the tunnel. The court's move is about the only feasible one for digging the firm out of bankruptcy. Despite this, the solution appears to be sensible, and the need for further public moneyhas been avoided, which is a considerable plus. Asthe noble Lord, Lord Dykes, has said, unanimous approval for the restructuring seems to be unachievable, but it is obvious that this is a suitable plan and that the condition of gaining approval from 80 per cent of shareholders is sufficient in the circumstances. If successful, this restructuring of the debt will pave the way for an assured future, which, given that Eurotunnel has a concession to operate the tunnel for the next eight decades, will be welcome relief for investors, shareholders and partners alike, as well as for both private and commercial users.
	What is the reason for the spiralling costs and the unsustainable debt that has induced government intervention to contain the losses? Why has Eurotunnel been unable to pay back the loans and had to resort to government grants time and time again? Several speeches today have gone into at least some of the reasons, but the fundamental problem that has stanched repayments and financial sustainability has been the grossly inaccurate forecasting of the likely revenue to be obtained from both passengers and freight, and the under-use of the tunnel's capacity. The forecasts were optimistic in the extreme. The predictions have often exceeded the actual demand by as much as 300 per cent. Yet lessons do not appear to have been learnt during subsequent planning stages. My predominant concerns relate to the now as yet incomplete Channel Tunnel rail link, which has soaked up government grants of a far higher value than was anticipated. It is imperative that this forecasting is more accurate and that there is much better scrutiny of this project as well as of the Eurotunnel.
	The Channel Tunnel rail link is indicative ofthe difficulty of delivering large-scale engineering projects. The Department for Transport is committed to providing over £1.8 billion of funding, which accounts for over a third of the total cost of the project and is far higher than that originally granted to the private sector consortium that won the contract to build the railway. This sum, although immense, would be acceptable if the value of that investment to the taxpayer exceeded the initial cost. However, the Public Accounts Committee report argued that the cost of the link could not be justified on the basis of passenger numbers alone. The committee suggested that significant regeneration benefits were essential to justify the outlay.
	Noble Lords will be aware that the rail link was divided into two sections. The first section was opened in 2003 and is linked to Ashford International station, where the regenerational impact has boosted the town's economy, as well as that of the wholeof Kent. The Government's laudable objective to redevelop Ashford was significantly enhanced by integrating the station so prominently into the Channel Tunnel service. That was a sensible and considered move that provides a wider context to justify the investment into the first CTRL section.
	Why, therefore, are the Government acting so complacently over the decision to reduce Ashford's role in the future operations of the CTRL? The second section will be opened in October, and there will be a subsequent cut in Eurostar services offered from Ashford, which could undo the good that the station has brought to the area since 2003. The Government have thus far denied that this will have a significant impact on the town, stating that 80 per cent of current demand for the station will be retained. Surely this cut of roughly a fifth of demand will be detrimental to the town. Furthermore, judging by the forecasting that has soured the rest of the project, I suspect that the damage could be far greater.

Lord Berkeley: My Lords, the noble Baroness says that she travels to Brussels very often. Does she agree that, if she lived in east Kent, the fact that the plan is that there will be no through services between Ashford and Brussels would be to be deplored?

Baroness Hanham: My Lords, that was what I was saying. The service from Ashford is to be cut by a fifth. I was very much deploring that, because clearly a great number of people get on and off at Ashford. It is a very valuable intersection. However it came out, I meant that there will be a reduction in the service, which will be of detriment to Ashford itself, which has been the subject of much regeneration as a result. I join my honourable friend in the other place, Damian Green, MP for Ashford, in urging the Government to persuade Eurostar to review that reorganisation of services to ensure that the links with Ashford are maintained as they are now.
	The CTRL has mirrored the financial black hole of the entire Channel Tunnel project. There appear to be significant deficiencies in managing not just rail but any large-scale construction project. Almost without exception, such projects are not delivered within the intended timescale and cost far more than originally projected. One wonders what the ramifications are for other projects, such as Crossrail, Thameslink 2000, the Thames Gateway, widening the M25 and, of course, the Olympics. The track record of financial stumbling blocks and botched project management does not bode well for future large-scale projects. It is imperative that improvements are made in their delivery and management.
	I must reiterate the obvious: the financial situation of the Channel Tunnel remains bleak. It is bleak because of the huge debts, its virtual bankruptcy and the poor value and return to the public from significant investment in it. However, there is potential for it to become successful and it must become so. The trains provide a clean, efficient and attractive alternative to plane travel or ferries. Regeneration can and should be achieved in communities that are ready and able to support the project. I am optimistic about the future of the Channel Tunnel itself. The most important point in this debate is not necessarily about the tunnel itself but about our country's approach to transport and construction projects. More emphasis must be put on measures that provide concrete solutions and make our country a better place to live and work in.

Lord Bassam of Brighton: My Lords, I am very grateful to the noble Lord, Lord Dykes, for stimulating this debate, for a number of reasons. Since taking on this brief, this is the first opportunity I have had to talk about trains, about which I am very enthusiastic. I am grateful for the opportunity to meet all the other train-lovers in your Lordships' House as a collective, and I intend to deepen our relationship over the coming weeks and months because I am very passionate about the subject. It is always a delight to talk about the Channel Tunnel because it provides access to Paris, one of the great cities of the world, and has brought me many hours of pleasure with my family and my partner as a mode of travel. Noble Lords have not disappointed me in their questions; although I may not have the answers to all of them, they have often puzzled me over the years, too.
	I particularly liked the introduction to the subject by the noble Lord, Lord Dykes, with his political and economic history of the Channel Tunnel. I probably agreed with a lot more of what he said today than I might have done in years gone by, when he sat on different Benches. No matter; the noble Lord said many things with which I found it easy to agree.
	I was struck by the observation of the noble Lord, Lord Harrison, that this was Mrs Thatcher's only grand project. Perhaps she also saw the M25 as a grand project; sadly, she probably found more favour with it. There we are; that's history.
	The debate is designed to focus on the economics of Eurotunnel, although noble Lords understandably strayed far and wide from that. They asked a wide range of questions, and I shall answer as many of them as I can, perhaps not as adequately as I would like. The noble Lord, Lord Dykes, set out very well the financial position of Eurotunnel. I will rehearse some of what he said and add some extra detail if I can.
	As all contributors to the debate will appreciate, the financial situation of Eurotunnel, the private-sector owner of the companies operating the Channel Tunnel, is not a matter for which the Government have responsibility, just as they are not answerable for the financial situation of any other private-sector company. It is a matter for the board and its shareholders.
	However, the Government recognise that the Channel Tunnel is not just a unique piece of international transport infrastructure but a very important link to Europe, economically and environmentally, which no doubt will assume greater importance, for the many reasons mentioned by noble Lords. It could make a big contribution to reducing carbon emission levels and so on.
	The tunnel was created by virtue of the 1986 treaty of Canterbury and the ensuing concession agreement. The Government are concerned with the Channel Tunnel, if not with Eurotunnel's financial situation. The treaty of Canterbury between the UK and French Governments paved the way for the construction of the tunnel. In particular, it declared that the Channel Tunnel would be constructed and operated by private concessionaires, without recourse to government funds or government guarantees of a financial or commercial nature. As many nobleLords have said, Mrs Thatcher was very determined to ensure that the project worked in that way. Inthe subsequent concession agreement, the two Governments awarded the rights to construct and operate the tunnel to the Channel Tunnel Group Ltd and France Manche S.A., which are the companies—one English and one French—within the Eurotunnel group. The agreement gave the concessionaires, among other things, freedom to determine tariffs and commercial policy. It also dealt with lenders' security, giving lenders the right to put in their own substitutes to operate the concession, in the event of default by the existing concessionaires.
	Eurotunnel's financial difficulties are well known. The group has never generated enough revenue to repay the debt required to meet the unexpectedly high cost of construction, but at operating level the tunnel has generated positive cash flows, so with a lower debt burden it would be a potentially profitable enterprise. As noble Lords noted, there was financial restructuring in 1998, but it proved insufficient to overcome Eurotunnel's fundamental problem: too much debt.
	Without another, more effective restructuring, Eurotunnel would not have been able to start the debt repayments due at the beginning of this year. To avoid looming bankruptcy, the group applied in July 2006 to the Paris commercial court for protectionunder the recently introduced Safeguard Procedure, an approximate Gallic equivalent to chapter 11 protection, which is available for companies in financial difficulties in the US. The procedure has given Eurotunnel breathing space to devise and propose to the Paris court a restructuring plan that would reduce debt to sustainable proportions. I understand that the plan would cut Eurotunnel's debt from £6.2 billion down to £2.8 billion of bankdebt and hybrid notes that would have a value of£1.3 billion when issued.
	The restructuring plan was endorsed by votes of Eurotunnel's suppliers, creditors and bondholders before being approved by the Paris court last month. The court has given Eurotunnel 37 months to implement the plan. It appears that a sufficient number of shareholders must now exchange their Eurotunnel shares for shares in a new holding company, if the restructuring is to succeed.
	Although the Government naturally discuss matters of current interest with Eurotunnel, as we would with any other major transport organisation, I should stress that they have taken no part in the restructuring plan, given the treaty's preclusion of governmental assistance. Restructuring is a matter for Eurotunnel, its shareholders and creditors and, where there are disagreements, the courts.
	However, as noble Lords will be keenly aware, we have been observing events closely, in liaison with the French authorities. We did not want to be taken unawares by any potential developments. As I explained, the Government hold no particular brief for Eurotunnel as a company. What counts is that the Channel Tunnel is operated efficiently, safelyand, importantly, securely by concessionaires with appropriate financial backing. That said, Eurotunnel's restructuring plan appears at the moment to be well on track, although there is still the hurdle of shareholder approval to which I have referred.
	Whether Eurotunnel's restructuring plan finally succeeds or not, the tunnel will of course continue to be subject to a regulatory regime overseen by the Anglo-French Channel Tunnel Intergovernmental Commission, to which noble Lords have made much reference—in particular, the noble Lord, Lord Berkeley. Similarly, safety will continue to be overseen by the Channel Tunnel Safety Authority.
	Noble Lords made many points and I shall deal with those which are best dealt with from the Dispatch Box. As I said, I admire what the noble Lord, Lord Dykes, has said. He implied, perhaps unfairly to some extent, that problems stemmed from the insistence of the noble Baroness, Lady Thatcher, that no public money should be spent. As I have explained, if this provision had not been in the Treaty of Canterbury, taxpayers perhaps, rather than the private sector, might have had to fund the current shortfall, with all the implications that that might have had in terms of knock-on across investment more generally into our transport infrastructure. It is only right to say that investors knew at the time that there was a risk attached to the anticipated costs and revenues. These risks exist in many projects. I think that the noble Lord, Lord Harrison, referred to PFI. Perhaps if we had had PFI in the way in which it is structured now, a different approach might have been adopted. But that is history.
	The noble Lord, Lord Harrison, asked a number of questions, one of which was about the Government reducing the cost of regulation. Eurotunnel's payments to the IGC are just under £2 million per annum. They are fixed as part of the concession agreement, which was signed by the UK and French Governments. The true cost of the services provided by the IGC could increase, particularly with the new regulatory responsibilities that it has taken on. It would be fair to observe that the fixed rate provides Eurotunnel with certainty over the level of its contribution for the duration of the concession. Department for Transport officials have discussed the cost of regulation with their French counterparts, but as yet no clear conclusions have been reached.
	The noble Lord, Lord Harrison, also asked for an update on when share trading might resume. That is a matter for the company and the appropriate financial authorities. I have no more insight into that than does the noble Lord. He also made a point about the Waterloo International station—a question that I have asked a few times—and why there cannot be two points of embarkation and arrival. Ultimately, it is a commercial judgment which Eurostar is best placed to make. My understanding is that Eurostar does not consider a split between St Pancras and Waterloo International to be commercially attractive.
	The noble Lord, Lord Harrison, also asked whether the minimum-use charge could be reinstated. This payment was made under the terms of the 1987 rail usage contract with SNCF and British Railways Board, which guaranteed Eurotunnel a minimum level of revenue when freight and passenger levels were below a certain threshold. It was always understood that this period, and the guarantee that would apply, would come to an end. Of course, it did end in November 2006. It was always intended to be a transitional measure. So I do not see that as a realistic likelihood.
	The noble Lord, Lord Berkeley, as ever, asked a number of very perceptive questions and made some very useful points in contribution to the debate, including whether railway operators should or should not have a policing function. Specialist activities are undertaken by the appropriate authorities. The noble Lord will have heard me describe some of those while wearing my other hat as a Home Office spokesman. Of course, we now have Customs officials working in Kent and on the other side to ensure that immigration issues are properly resolved. Transport operators meet costs—not just Eurotunnel, but airports and ferry operators have to meet costs as well.
	The noble Lord was insistent in saying that security requirements were too strict and too costly compared with ferries. Security requirements are based on advice received from enforcement authorities, which take a particular view on things. It would be fair to observe that over recent years this has attracted a great deal of controversy. We think and believe that things are much greatly improved. I am sure that that is of benefit to passengers and to freight operatorsas well. It is right to say that requirements on Eurotunnel are perhaps heavier than on ferries, although I should perhaps point out that the requirements for the aviation industry are heavier still, and I think that we understand why that is the case.
	The noble Lord, Lord Berkeley, also raised unfair charges, as he saw them, for freight through the tunnel. Again, that matter is not really for the Government. It is something in which the IGC should become more directly involved, so I do not think that I can properly comment on that.

Lord Berkeley: My Lords, does my noble friend accept that the IGC is at least half the responsibility of the British Government, and the other half the responsibility of the French Government? Therefore, to say that it is nothing to do with the Government seems to me to be stretching it a bit.

Lord Bassam of Brighton: My Lords, technically, I guess that the noble Lord is right, but it is something for the IGC to resolve independently and is not something in which we have a direct responsibility. Yes, the noble Lord is right to make the point that there is obviously an indirect responsibility. Thenoble Lord, Lord Bradshaw, made a very powerful contribution with his insights. He is a great expert in these matters. I was grateful to him for raising issues relating to freight. I happen to share the view of the noble Lord that, of course, we should encourage more freight, and more freight through the tunnel. We welcome the fact that the EWS has agreed to continue running freight services through the Channel Tunnel. We all want to see growth on that route, which can be sustained only on a robust, commercial basis. Clearly, it is important that marketing works and is improved. We obviously will do and play our part in urging an earlier agreement to ensure that growth can continue.
	The comments made by the noble Lord, Lord Berkeley, on security issues and the problem with illegal immigrants have obviously had a very adverse effect. I have suggested that some of those issues are being resolved and overcome. Of course, it is right that we play our part in ensuring that that is the case. I was also very pleased to see that the number of passengers going through the tunnel is increasing, to which the noble Baroness, Lady Hanham, referred. My understanding is that some 7.9 million passengers travelled through the tunnel on Eurostar last year. I think that the noble Baroness said that it was a record, which is certainly my understanding.
	The noble Lord, Lord Bradshaw, asked whether we accept that there should be open access for freight on the Channel Tunnel and whether we as a Government would enforce it. Yes, we are clear that the EU open-access regime applies to the Channel Tunnel. If infrastructure owners of other state railways are not abiding by this, it is obviously open to operators to challenge, with regulators being used or through the courts. He also asked whether the rail usage contracts take precedence. My understanding is that rail usage contracts provide guaranteed paths, but of course there is still sufficient capacity, as the noble Lord said, for other usage. Open access operations are very important to that.

Lord Berkeley: My Lords, my noble friend has answered part of the question on charges asked by the noble Lord, Lord Bradshaw, but while the rail usage contracts set out certain charges, most of us believe that the open access directives provide for different charges. Which of the two takes precedence when it comes to charges, the open access directives or the usage contracts?

Lord Bassam of Brighton: My Lords, I do not know the answer. I shall have to research the question and write to my noble friend and other noble Lords. It is not something I am fully briefed on.

Lord Bradshaw: My Lords, will the noble Lord make the position quite clear? In any market the ruling factor is what the market will pay. It does not matter if you have spent £5 billion on building something; if no one uses it, you get nothing back. There must be a price at which this will pay. If the open access directives, in my interpretation, state that the market price should be charged, that is one thing. If then there is a supplementary usage charge and a supplementary charge for examining the train and so on, the price then moves away from the market level. Any answer the Minister gives us in writing should make quite clear which charge should apply for open access.

Lord Bassam of Brighton: My Lords, the noble Lord makes a fair point and I shall try to address it. Of course markets are affected by the cost of regulations, and operators providing services understand that point. The noble Lord also asked about what is received in return for the £6.1 million-worth of payments received by Eurotunnel. Those payments are intended to support operating costs such as track maintenance both for freight and passenger transport. This is a contractual agreement which dates back to the time of the construction of the tunnel.

Lord Bradshaw: My Lords, I am sorry to interrupt the Minister again. In his reply, can the noble Lord make sure that it is absolutely clear that this applies to both freight and passenger services? I have an idea that it applies only to freight. If so, and given that so little freight is using the tunnel, what are we actually paying for?

Lord Bassam of Brighton: My Lords, my understanding is that it applies to both. The noble Lord raised more general issues of freight on the Channel Tunnel link. I understand that it is not envisaged that freight will use the line. However, as well as Eurostar, fast Kent coast commuter trains will also use the track, thus freeing up capacity on traditional lines for freight. That is very important.
	I am conscious that I am running over my time and that I should have responded to one or two further questions, in particular from the noble Baroness, Lady Hanham. She asked about services from Ashford being cut. I understand and share her concern. Since I come in from Brighton, I can confirm that we like using the rail link at Ashford. I wish it was a bit faster, but there we go. It is ultimately an operational matter for Eurostar, which made the judgment that the maintenance of current levels of service is not sufficiently attractive as a commercial operation. The noble Baroness was part of a previous Government that set the terms on which this service would operate and how it was financed, as well as the element of bringing in the private sector.

Baroness Hanham: My Lords, I do not bristle very often at the noble Lord, but I do bristle a bit at that. This was a question about the service now and into the future, not about the past. I think it deserves a better reply.

Lord Bassam of Brighton: My Lords, the noble Baroness is very generous and does not usually bristle. I wanted simply to make the point that the original agreement provided that the private sector was invited in to run these services. We are all concerned to ensure that we get the best possible use out of important infrastructure, not least because of the environmental benefits this service can bring. Several noble Lords have quite properly referred to those benefits in the debate.
	I am sorry to have run over my time. I shall endeavour to answer the one or two remaining questions put to me in correspondence. I am grateful to the noble Lord, Lord Dykes, for facilitating the opportunity for noble Lords to discuss this very important issue, and there is no doubt that we shall return to it. We all value the Channel Tunnel link. We as a country should celebrate and enjoy it—and long may that be the case.

Lord Dykes: My Lords, I shall be brief. I am very grateful to the Minister for answering so many of the points put to him in the time available. As an amateur outside observer myself, I hope that noble Lords will not mind if I acknowledge the benefit of two great experts in this area whose contributions have enhanced the debate: my noble friend Lord Bradshaw, who knows a lot about these matters, and the noble Lord, Lord Berkeley, who worked on the Eurotunnel project for many years and helped in the development of these services. I am also grateful to the noble Lord, Lord Harrison, who referred to Jacques Gounon's campaign for lower regulatory costs. This critical stage when company mark 2—or mark 3, given the way it is going with full approvals—is a great moment for outside official authorities to help as much as possible with regulations and the law.
	The noble Lord, Lord Berkeley, was right to say that the project finance was committed before the final costs were known and that it is a lesson for future projects of such a huge size. I was glad that he raised the issue of safety regulations. One must recall the tragedy and grief caused by the "Herald of Free Enterprise" accident. The newspapers did not suggest then that all ferry boats should be closed down for safety checks, and rightly so. But I recall that when someone threw some combustible material into a lorry while it was going through the tunnel, the Sun newspaper and others thought that the tunnel should be closed for five years while it was inspected for safety. Perhaps it was not the Sun; I do not want to be unfair to the Murdoch press—it would be painful to do so.
	My noble friend Lord Bradshaw referred repeatedly to open access, and I agree with him. The noble Baroness, Lady Hanham, is to be thankedby all for standing in for the noble Lord, Lord Hanningfield. I am grateful to her for her remarks. I did not want to be too critical about past events, and indeed, as she rightly points out, the plan would not have got going but for the agreement of both Governments. However, I suppose that a different culture operated in both countries at the time.
	The Minister was very emotional about Paris and I share his view about la ville lumière. He also gave us some detailed and useful facts. However, it would be helpful to have more answers on the question of the cost of the IGC and other points because they will help us to determine the position in more depth. With that in mind, I want only to say that this has been a useful debate and to beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

Business

Baroness Crawley: My Lords, with the leave of the noble Lord, Lord Bowness, I rise only to say that because of the inclement weather and noble Lords' desire to get home quickly, noble Lords may not feel compelled to use all their 15 minutes, if that is convenient for them.

Europe in the World (EUC Report)

Lord Bowness: rose to move, That this House takes note of the report of the European Union Committee on Europe in the World (48th Report, HL Paper 268, Session 2005—06).

Lord Bowness: My Lords, this report was prepared by Sub-Committee C of the European Union Committee and concluded just prior to theend of the last Session. At the time I chaired the sub-committee, and I am grateful to the present chairman, the noble Lord, Lord Roper, for allowing me to present this report to the House. My thanks are due also to the witnesses in the inquiry: Mr Hoon, the Minister for Europe; Mr Robert Cooper, the director-general of external economic relations in the Council secretariat; Ambassador José Cutileiro, special adviser to President Barroso; Mr Patrick Child, chef de cabinet to the External Relations Commissioner; my noble friend Lord Brittan of Spennithorne,a former Vice-President of the Commission; andMr Erwan Fouéré, the European Union Special Representative to Macedonia. I also thank the members of the then sub-committee for their work and our then Clerk, Dr Emily Baldock, for her help in organising the inquiry and preparation of the report, all within a tight timetable.
	At Hampton Court in 2005, Dr Solana, the High Representative, and the President of the Commission were asked to address co-operation on external relations which led to the communication entitled "Europe in the World: Some Practical Proposals for Greater Coherence, Effectiveness and Visibility". The communication formed the basis and subject of this inquiry. In June 2006, the European Council welcomed the communication and agreed to a stock-taking on its implementation at the end ofthe Finnish presidency. The presidency conclusionsof December 2006 make no more than a nod inthe direction of the communication and its recommendations. Perhaps the Minister can tell the House what progress is being made and confirm that there is indeed political will among member states to take matters forward.
	The common foreign and security policy hasbeen a rapidly growing area of activity and is of considerable importance—too important to be left on one side following the French and Dutch rejection of the constitutional treaty. The sub-committee was supportive of the Commission's aims expressed in the communication and decided to examine them in more detail from a positive point of view to see what could be done within the existing treaties and whether the proposals could go further.
	The communication points out that Europe faces both economic and security challenges: the growth of the new economies in Asia and elsewhere, terrorism, organised crime and regional conflicts to name but some. The Commission proposed that member states and the European institutions examine how to work together to develop and implement external policies; how to increase effectiveness of all policies and actions, external and internal; and how to strengthen accountability and increased visibility of European Union policies.
	The Union has a number of what the Commission describes as "external policy assets", including enlargement, which itself is an instrument for the extension of peace, stability and democracy, and should continue to be so for so long as the aspirant countries remain convinced of the genuineness of the EU's intentions; the European neighbourhood policy, offering a stake in the internal market and helping the process of reform in the countries to which it applies; trade, which was outside the remit of the sub-committee and this report; development policies which offer specific instruments, especially through the medium of the European development fund dealing with governance and peace-keeping; the common foreign and security policy, which offers relations with strategic partners around the world; and lastly, disaster response and crisis management work in the field through the European security and defence policy—the ESDP. There are many examples of humanitarian assistance and civil protection work that has been undertaken, and the police missions in Bosnia-Herzegovina, Macedonia and the Democratic Republic of the Congo all demonstrate the growth and development of the ESDP.
	Although member states, the Commission and the Council all have their own role in external relations, the European Union itself has a growing and wide responsibility on the international scene, but even if the objectives are clear, implementation falls to different parties. The three must therefore work together to ensure that whenever possible there is a unified global presence. The Commission advanced the convincing argument that there is a link between the internal and external policies of the Union. The development of an energy policy and justice and home affairs are but examples.
	Chapter 2 of the report looks at the Commission's proposals for greater coherence in external affairs. There is undoubtedly a need for improvement. The committee has noted this in a number of previous reports. The constitutional treaty would have brought institutional change, in particular the abolition of the rotating presidency, the Foreign Minister with a place in both the Commission and the Council and the External Action Service. It is worth noting the evidence of Robert Cooper from the Council, who noted:
	"The EU's ambition is to speak with one voice and it is a very laudable one, but then we send three people to do it—the Presidency, the High Representative and the Commissioner".
	The treaty would have fused these three.
	How successful will the Commission's proposals be and do they go far enough? Are they possible within the treaty as it stands? We believe that it was possible to go further and that the institutions and the member states should continue their search for new ways forward. However, without the constitutional treaty or something similar, it has to be recognised that there are limitations. In the opinion of the committee, the Commission's proposals do not amount to cherry picking, and in any event I would say that if something is a good idea, why not do it?
	Chapter 3 examines the proposals to improve strategic planning. In particular, the Commission proposes a meeting at the beginning of each presidency between the President of the European Council, the presidency Foreign Minister, the Commission President, the External Relations Commissioner and the High Representative. They propose likewise the attendance of the High Representative at the meetings of the Relex commissioners. The noble Lord, Lord Brittan, pointed out that as the High Representative would not have a clear position at those meetings, his influence would depend upon his own personality. In their response, the Government referred to difficulties in achieving these meetings because of the extensive travelling of the High Representative.
	Nevertheless, in the report we welcome the proposals. But if they are not to be mere window-dressing, then, as Robert Cooper also told us, it is the day-to-day co-operation that really matters. Officials in both the Council and the Commission need to work together and build relationships. We noted the encouraging examples of the Commissioners and the High Representative working together. If that leads to the presentation of joint papers for discussion in Council, it will be an improvement. It is a pity that the paper which is the subject of this report was not produced jointly. It would have had greater force had it been. Nevertheless, there is evidence that joint papers are now accepted. We noted that in the papers to be produced in connection with the Africa strategy on which the committee reported earlier.
	Typical of the problems that exist is the existence of the Commission's own crisis centre and the Council's situation centre. If the centres cannot be amalgamated, and apparently they cannot be, then the problems of sharing information and intelligence need to be addressed.
	The European Union is represented at a number of international organisations and the Commission's proposals include early work to enable joint presentation of a European Union position. The Commission has considerable resources and these should be available to the presidency at short notice. We recognised that the Commission's proposals for its participation in the euro-zone meetings are sensitive and largely matters for members of the euro-zone.
	In Chapter 4 we looked at the presence of the European Union in the field and at the relations between the Council and the Commission. The Commission proposes that Council and Commission should consider the double-hatting of European Union special representatives where appropriate and that the positive experience of Macedonia should be drawn upon. We were extremely fortunate to hear evidence from Mr Erwan Fouéré, the European Union Special Representative in Macedonia. He was sure that double-hatting is a good idea per se and that Macedonia is not a special case. He was enthusiastic even on areas of overlap of competence. He obtained joint instructions and—far from creating conflict between the institutions—co-operation and contacts between different desks in different offices have been boosted. It is clearly of benefit in Macedonia and should be seriously considered especially in other parts of the Balkans. It is important to note, however, that this recommendation is based on the special representative being in the country and not in Brussels, and that the special representatives are, as in the case of Mr Fouéré, people of sensitivity who can work with both institutions. To have worked for both is a considerable help.
	The Commission also looks for better use of Commission delegations, the special representatives and the embassies of member states. This has to be common sense and we urge the Government totake a pragmatic view about co-operation betweenthe presidency, the member states, the special representatives, the ESDP mission representatives and Council secretariat officials. We referred to this in our previous report on Africa and again make the case in respect of Addis Ababa and the western Balkans.
	In Chapter 5 we looked at co-operation between EU institutions and member states. The Commission looks for greater co-operation between member states in the area of consular assistance, especially in disaster situations. We had some doubts about this and particularly the Commission's desire for its delegations to play a supporting and complementary role. On balance—and witnesses confirmed this—consular assistance is a matter for member states. Nevertheless there may be a role for Commission delegations to offer support in crisis situations. The Commission could explore this further with the Council and member states. While there may be reservations on some elements—and those reservations may be legitimate—they should not be used as an excuse to preclude common sense and practical measures of co-operation between member states and the different offices of the Union.
	There may well be cases where it would be sensible for premises to be shared. That would have to be on a case-by-case basis and subject to the agreement of all parties in all cases. We welcome the Commission's proposals for staff exchanges between the diplomatic services of the member states and its own staff.That was supported by our witnesses. The United Kingdom and others have a wealth of experience to share with the European Union, and we welcome the Government's support for this.
	Chapter 6 of the report deals with the need for improved accountability and the greater visibility of policies. The chairmen of the foreign affairs committees of national parliaments meet during each presidency on the initiative of the parliament of the presidency country. In addition, the European Parliament calls meetings of representatives of national parliaments' foreign affairs committees. These all provide for a useful exchange of views,and it is suggested that the External Relations Commissioner and the High Representative attend to brief participants as a matter of course. The committee welcomed that. In my experience the meetings, particularly those at which Mr Solana has been present, have been useful. In their response the Government see no problem with the suggestion, but, in the interests of parliamentary involvement, I ask the Minister to take the matter forward by confirming that the Government will actively promote the idea, which will need forward planning by the institutions, the presidency and the presidency parliaments.
	Greater visibility for European Union initiatives and foreign policies is a matter to which the Government should give due prominence, and they should be prepared to give credit to the EU for its successes. Too often the temptation is to take the credit nationally. Without due recognition of what we are able to achieve jointly, it will not be possible to establish the credibility and desirability of the European Union's policies. I thank the Ministerfor the Government's response, and note thatthe committee's recommendations are generally supported. I hope that in speaking to the report I have conveyed to your Lordships the importance that the sub-committee placed on this communication. I commend the report to the House, and invite your Lordships to take note of the same.
	I crave your Lordships' indulgence to add my personal thoughts on this subject. Surely it is crucial that in the area of common foreign and security policy we do everything possible to achieve a unified and coherent European policy. Of course we shall not always succeed, but it must always be worth trying. Whatever other relationships we wish to pursue, the relations with our partners and neighbours in the European Union are of importance.
	Angela Merkel, in her recent speech to the European Parliament at the commencement of the German presidency, said that foreign and security demands are being made upon the EU from all sides, and referred to the western Balkans, Kosovo, the Middle East, the neighbourhood policy and the Black Sea region. There is the whole question of our relations with Russia. The new members from central and eastern Europe will expect and deserve more than self-interested bilateral policies from the large, older member states. There are the questions of the new neighbours: Ukraine, Belarus and Georgia.
	Is there to be a European neighbourhood policy-plus, or have the Germans already lost that in the face of Mediterranean interests? Future enlargement also looms large for the western Balkans, to say nothing of Turkey and many more. Are we going to equip the European Union to deal with those issues more effectively than at present or refuse to consider changes merely because they were part of the constitutional treaty?
	If there is to be a political commitment to trying to achieve a genuine, common, successful European foreign policy, we need to address the issues wherever possible, particularly the rotating presidency and the role of the High Representative as Foreign Minister. We cannot play games and say that any proposals in the treaty must either be rejected or, if supported, go to a referendum. I hope that the leaders of political parties will start to give a lead, not just to other Governments but to their own electorates. I hope we shall hear from the Front Benches in your Lordships' House that they too support treaty amendment to achieve the changes I have referred to without any commitment to a referendum, and at the very least will support the finding of as many ways as possible to make progress within the existing treaties and support the initiative of the Commission, as set out in the proposal. I beg to move.
	Moved, That this House takes note of the report of the European Union Committee on Europe in the World (48th Report, HL Paper 268, Session 2005—06).—(Lord Bowness.)

Lord Harrison: My Lords, in view of the previous debate on the Eurotunnel, I welcome the noble Lord, Lord Bowness, as he has made his way up from Ashford in Kent today. In view of the inclement weather, I wish him a speedy return after our speedy contributions to this very important and timely debate.
	I ask the Minister first of all about the Prime Minister's comments to the Liaison Committee on Tuesday, where he seemed to say that after he has gone the United Kingdom will need to decide whether it lays greater emphasis on working with the European Union, perhaps at the expense of the work it has done with America. It was always my view that the Prime Minister was right to be as even-handed as possible, but I wondered how my noble friend interpreted what he said.
	The debate is also timely because the reporton the European Union in the world, which is an excellent contribution to the Commission's paper, demonstrates that the EU does not reflect its economic power, its military strength or the fact that it is the biggest market in the world. We seem to have been concerned, for understandable reasons, with creating affluence within Europe rather than influence outside it. It is also true that collectively as a union we do not punch our weight; indeed, we punch below it.
	Nor are we punchy enough in getting across the European Union view to the wider world. I have never quite understood why we have not been more influential, for instance, in the Middle East. After all, the countries there are our neighbours, and we should be having a much more influential dialogue withthem than has hitherto been the case. That is understandable. Europe is not like America. It is sui generis, a combination of 27 countries, but we should make efforts to make a virtue of the vice that we are many countries in a union. If the EU is performing its role less effectively on the world stage than it might do, the United Kingdom, as part of the union, also lessens its own effect—although that is separatefrom the sterling work done by the Foreign and Commonwealth Office and our Ministers in that respect.
	In their reply to the Commission's paper, the Government make a point of saying that the Commission's proposals are distinct from those ofthe constitutional treaty. It is understandable that that is said; however, the proposals may be distinct, but they are not unrelated. In common is the need to make the European Union more effective and efficient. That has to do with how we set about working ourselves and the complications that are arising minute by minute.
	Let us look at the most recent creation of the trio of countries—the present, future and future perfect—that will take the presidency of the Council of the European Union, added to the current triumvirate of past, present and future countries. That begins to complicate matters, although there may felt to be a need to be able to look more strategically, look into the future at greater length and build up consistency.
	I am in favour of what is said about strategic planning, the High Representative and meetings with the Commission and Council, but I share the Government's concern that if these liaisons are to be fulfilled, the High Representative, who is often outside Brussels, will spend more time in meetings. We must never trespass into the area whereby improving co-operation means asking the High Representative to attend more and more meetings. That could create the paradox of less co-operation in the long run. We must be judicious in our selection of what is done in trying to build up co-operation. On co-operation between Council and Commission officials, will my noble friend talk about the practical ways forward that we in the UK will promote? Given that I am asking a number of questions, I will be very pleased for my noble friend to write to me if he is not able to respond during the debate.
	The noble Lord, Lord Bowness, has already pointed out the irony that one of the suggestions made in the Commission's proposal was not subject to a joint consultation. Nevertheless, there is scope for development, and I hope that the Government are sympathetic.
	The noble Lord alluded to information exchanges, the crisis centre and the situation centre. If they cannot be merged, will my noble friend say a little more about the Government's response, which I think is lukewarm? They say that the sharing of reporting and analytical resources is limited. In what way are they limited? What can be done to put it on a more positive basis?
	On the Commission's representatives on the euro-zone, while I wholly acknowledge the inviolability of the European Central Bank to retain its independence, it seems a lukewarm and inadequate response for HMG to say that these are matters for members of the euro-zone alone. That is not the case. The euro is a creation of the European Union which affects members of the European Union standing outside the euro-zone. A change in interest rates may well have a knock-on effect on the economy of the United Kingdom. On ECOFIN, there are other areas where we may be represented in the foreign fora of the world, where we may want the Commission to speak up on behalf of those countries which fall outside the euro-zone.
	Double-hatting has been commended. Macedonia seems to have been a shining example. I was very pleased to meet its Deputy Prime Minister recently and to have that confirmed. There is scope for further development on co-operation between Council and Commission representatives with regard to the west Balkans and Addis Ababa. However, I note that again HMG's reply is that they will take this into account. Can we be more positive? What are we going to do to activate the opportunities that arise and be more coherent in the wider world?
	The Government support consular assistance in crisis situations, but why only in crisis situations? After all, if we co-operate when we do not have a crisis, there are immediate benefits, but co-operating in non-crisis situations means that we are more effective in a crisis because we are used to the idea of co-operation.
	I told my noble friend before the debate started that I would say a few words about sharing consular premises. I have long believed that we could make more of an advance in this area, most notably for the security of our people and the staff of other embassies, who work in foreign parts and may benefit from having secure premises if we co-locate. But other savings that can be made mean that we can bring to the fore resources of which we might otherwise be starved. In that case, we will then give a better service to UK citizens and other EU citizens. The noble Lord, Lord Wright of Richmond, reminded me that we have that kind of co-operation with some of our Commonwealth colleagues, so why should we not here? In addition, can my noble friend report on what we are doing in the United Kingdom to aid and abet staff exchanges between Council and Commission officials?
	I have two more points. We talk much here about the Commission and the Council but I should like to see much greater exchange, especially with the staff of the European Parliament. Again, there are opportunities here that are almost wholly omitted from the paper, and I wonder whether my noble friend would respond to that.
	Finally, the summary refers to the need to encourage greater knowledge of the European Union and what we do actively in the world to promotethe ambitions and policies of not only the United Kingdom but the European Union. Can my noble friend say a little more about how we can be positive in saying that the European Union does much good work on behalf of the United Kingdom and we should jolly well say so?

Lord Dykes: My Lords, I was particularly pleased that the noble Lord, Lord Harrison, in his closing remarks referred to the European Parliament. Often in this country it is fashionable to mention all the other institutions except for the Parliament; there is a collective unconscious agreement, even if it is not a conspiracy, that we do not really mention it very much and regard it as being of very little importance unless it gets into the newspapers with some dramatic headlines. That is a pity as it has a very viable and valid role to play and should be regarded as an extremely important institution and not to be feared by any of the national parliamentary institutions of the member states.
	As this all started under the October 2005 Hampton Court summit meeting with the UK presidency, I hope that it will be the case in future that the UK Government will enthusiastically follow and copy some of the ideas in this report. I thank and congratulate the noble Lord, Lord Bowness, and all noble Lords involved; I would include myself in that except that, unfortunately, I was not a good attender at the later stages of the evidence taking, due to other commitments, although I was there at least at the beginning. I hope that the report will be received by the House as a useful contribution to the debate, much of it very technical, about how the modern European Union can work more efficiently in a functional way, but also with some interesting details that go into geopolitical aspects.
	The noble Lord, Lord Bowness, if I may embarrass him, has been a very distinguished chairman of the committee. I hope that I will not annoy him by saying that he is considered by most people to be a good European; I hope that that is all right and does not cause him difficulties with any of his colleagues on his Benches, as I regard it as a matter of praise and a compliment. I wish my noble friend Lord Roper, his successor, well as chairman of the committee from now on.
	I shall save time, after the very sensible exhortations from the Whips' Bench about timeand weather, by saying that I agree more or less completely with all the points made by the noble Lords, Lord Bowness and Lord Harrison. Double-hatting and the Macedonian example were referred to in paragraph 155 of the report; that is just the beginning. The whole of the European Community and now the Union has groped slowly—painfully slowly, sometimes—towards greater cohesion, and there is still a lot more work to be done. One remembers the fusion of the three communities of years ago and how long it took to come together. It is a slow process, but in a way that serves to reassure public opinion—or the opinion of those who wish to follow these matters in detail—that the process is based on serious foundations and is seriously thought out.
	The report also highlighted the fact that the Commission proposed that there should be a high-level strategic planning meeting at the beginning of each presidency. The noble Lords, Lord Bownessand Lord Harrison, referred to that. It will be an extremely important key to the future. More and more people throughout the world, starting in Europe and fanning out further afield, accept the global role of the European Union. The notion that the United States could be the leader of the Western world is old fashioned and out of date. The United States has, sadly for those of us who love the United States and the American people, made so many mistakes in strategic and geopolitical matters recently—mainly in its involvement in the Middle East and Iraq, which has been a huge disaster for America as well—that world public opinion will no longer accept the hegemony and leadership of the United States, unless by some miracle we return to the wise presidents and Administrations of yesteryear, who wished to be the guides to the Western world. But that happened in post-war recovery days and that time may have passed.
	The United States must be alongside all the other main entities of the world in coming together in a small planet, where there are urgent problems to be solved, to work with the European Union, Russia, China, India and South America. The whole of South America has become a very important area, as the noble Lord, Lord Triesman, acknowledged in his recent visit to Santiago de Chile. I include Africa in that, and helping Africa. It is the last continent that needs urgent help and could be the dynamic, high-technology continent in 70 or even 50 years time. Who knows? Each continent has its turn in world history, does it not?
	The growth and success of the euro worldwide is an accomplished matter—it is a matter of fact now and not just an emotional supposition.
	The euro has overtaken the United States in issuing universal bonds both on public and private sector accounts. The euro is firmly established inside the European Union as a successful and confidence-building currency.
	Given the improvements in the machinery, functioning and modalities of inter-institutional liaison, which are so expertly and splendidly set out in the committee's report, what will be the priorities of the EU in the future? I offer a few homespun thoughts, leaving out the complex details given the time pressures of today's debate.
	The European Union is very important from the point of view of putting over the philosophy of balanced economic policies and of combining the imperatives of economic growth and the good bits of the Anglo-American economic model with the strong social welfare tradition of European Union countries. That is a somewhat unfashionable thought for the newspapers of this country, but I am sure that it would meet the wishes of the wider European Union public and of those in the eight new member states from eastern Europe and even of those in the two islands, which, being small territories, are less beset by substantial economic problems.
	I hope that we are agreed that the United States needs to concentrate more on its own internal problems. It has huge unsolved economic and social problems and can no longer concentrate on being the policeman of the world while ignoring those problems. We still see the overhang of the tsunami that occurred in the richest country in the world and the fact that people have not been rehoused. United States citizens must be deeply worried about these matters and anxious that the US should settle more of its internal problems. That anxiety has surfaced in the presidential campaign.
	The United States should deal with world problems as one power among many other equal entities rather than saying, "We call the shots and determine policy". That is very important vis-à-vis Israel/Palestine. This June will mark the 40th year of Israeli occupation of the Palestinian territories. The Arab man or woman in the street presumably makes a comparison between the rightful ejection of Iraq from Kuwait a year after its invasion and Israel not being obliged to leave the occupied Palestinian territories40 years after its invasion of them. Some 32 United States vetoes, many of them under Chapter 7, have prevented Israel doing what is required, as moderate Israeli citizens now realise. This is causing harm to Israel, which is a great country. I support Israel enormously as a country, which, like any other, has its own internal problems of some magnitude. However, I do not support its occupation of the Occupied Territories.
	The European Union has a lot to do with aid to the third world. I am glad that the European Union/African Union policy is now developing. It is in its early stages. The African Union is still a very weak body and much more needs to be done with the help of the European Union. In the future the European Union will be involved in helping to modernise and reform the UN, working on energy policy, the environment, climate change and many other matters. I am sure that it will do so with increasing skill and support from all the member states.

Baroness Hooper: My Lords, as a non-member of your Lordships' European Union subcommittee, which prepared this excellent report under the chairmanship of my noble friend, I hope that I may be permitted a slightly different approach.
	By way of background I should mention that I served as a member of the European Parliament after the first direct elections in 1979. I represent your Lordships' House as a member of the parliamentary delegation to the assembly of the Council of Europe and to the assembly of the Western European Union and have done so for several years. If the noble Lord, Lord Dykes, thinks that the role of the European Parliament is neglected, he needs reminding of the role of the assemblies of the Council of Europe and of the WEU.
	I returned only yesterday from Berlin, where the parliamentary assembly of the WEU was meeting to consider its future and in particular its role as an assembly of national parliamentarians representing a wider Europe than the European Union and what that role should be in monitoring, for example, the European security and defence policy. I remind your Lordships that the WEU was originally set up by the Treaty of Dunkirk some years before the Treaty of Rome was signed up to.
	The role of the WEU was discussed in relation to various missions—the force recently sent to the Congo, the situation in Kosovo and the Balkans, the involvement in Operation Althea and other missions that have been referred to. It is a matter of concern that there is an overlap and lack of clarity between the roles of the WEU and the European Union. Given that the report encourages greater visibility and increased co-operation, I hope that in future similar circumstances, the role of the WEU will not be forgotten.
	By the same token, perhaps I may now turn to the Parliamentary Assembly of the Council of Europe, which—although I realise that trade was not part of the committee's remit—has an extremely important role in monitoring various global organisations. For example, there are annual reports on, naturally enough, the European Bank for Reconstruction and Development, and on the WTO and the OECD.The presidents or secretaries-general of those organisations normally come to our meetings to hear the reports, to participate in the discussions and to be accountable for their organisations. As long as the United Nations lacks a democratically electedforum, the role of a regional assembly representing46 countries—as the Council of Europe now does—is vital, as is the role of the European Parliament, which represents albeit only 27 countries.
	In that context, various subjects spring to mind which require accountability, visibility and more co-operation at a wider level. The Oral Question that I asked this morning, to which the noble Lord,Lord Triesman, responded, is relevant. It concerned Columbia, the fight against drugs and the need for concerted action—not only in carrying out programmes that require the co-operation of every country in the world, but in monitoring the effect of those programmes and learning from that experience, as the report mentions. The environment is another issue to which the noble Lord, Lord Dykes, referred, where one country alone cannot solve the problems.
	All those issues require better co-ordination and strategic planning. I am at one with the conclusions of the report on that, but my plea is that we must have horses for courses. Where organisations already have a specific remit, it is not necessary for the European Union to duplicate it. An example of that is the current process of setting up a costly fundamental rights agency within the European Union, given that the European Court of Human Rights and the Commission on Human Rights in Strasbourg are experiencing major budgetary difficulties. It is strange that all the member countries of the European Union, which are also members of the Council of Europe, do not see that as an unnecessary duplication.
	The report states in Chapter 6 that relations with national parliaments and the European Parliament should be fostered, but I hope that members of the committee will also encourage more communication and complementarity between the European Parliament, the Parliamentary Assembly of the Council of Europe and the Parliamentary Assembly of the WEU.
	Finally, whatever people may think of our membership of the European Union—and there are widely diverging views on that—the rest of the world undoubtedly sees us as part of Europe, whether one is talking about the Europe of the European Union or the wider Europe. I would like to think that it is both. I am all for recognising and highlighting Europe's role in the world and I very much welcome this report and this debate.

Lord Teverson: My Lords, I very much welcome the report, as I do the introductory remarks of the noble Lord, Lord Bowness, which I thought were excellent. I regret that I am not a member of the sub-committee but, when I saw that the debate had been tabled, it seemed to me that, rather than reducing the time available for speeches from a quarter of an hour, on such a broad subject the temptation would be to speak for much longer.
	Clearly Europe has shaped the world. Whether it is the Portuguese and Spanish in South America, the Russians in Siberia, or the French, the Dutch and the British in south-east Asia, the world as we see it atthe moment is very much a European invention.
	The report was in some ways a disappointment to me, but it needs to be seen in the context of this communication from the Commission. It is verymuch a plan B in that plan A was the European constitution, which gave a much greater role to the European institutions in foreign and defence policy. I think that that is how we have to view the matter. Indeed, the communication starts by headlining the important areas of Europe but then moves down into what I would call a technical and management agenda.
	It is important to remember some of the issues surrounding Europe and some of the areas where Europe stands at the forefront in the world community, a number of which have been mentioned already. For example, with its 27 member states it has a population of half a billion and is smaller only than India and China; it has the largest world economy—something like $13 trillion per annum, which is larger than the United States and on a par with NAFTA; and it accounts for about one-fifth of world trade and is the world's largest trading partner. In addition, as my noble friend Lord Dykes pointed out, not only are most bond reserves held in euros but the euro is now responsible for some 25 per cent of international reserve currency. That compares with the pound sterling at 4 per cent and the yen at something like 3 per cent.
	So Europe is a very big player in the world, and itis sometimes forgotten that it is a unique political organisation: it is both a community of member states and a community of citizens. That has not previously been seen in the world, and it is unique and successful in terms of international co-operation. However, it is seen very much as being big on global trade but as a minnow in otherwise projecting its power. I suppose that that comes back to the famous Kissinger comment from the 1970s Nixon era, "When I want to speak to Europe, who do I call?". We now have a telephone number that the Secretary of State in the United States can call—that of Javier Solana. As we know from the European constitution, we wanted a much greater role than is available at the moment but, even on soft power issues, Europe can be very proud about the number of things that it has done.
	As well as being the largest trading partner, Europe has also been active in areas such as the development trade rounds. As we know, Doha has stalled and we hope that it will be successful, but I believe that, as a unity, Europe has managed to keep those talks alive and still wishes them to succeed. European trade used its leverage and power to get Russia to sign up to the Kyoto Protocol, and that signature brought the protocol into force globally. Europe was able to give its assent to Russian membership of the WTO in exchange for that, and that was an example of it successfully using its leverage on trade to make the globe better.
	On climate change, the EU made the Kyoto protocol possible. We now have the largest emissions trading system, which has its difficulties but will be a model for future global trading of carbon, a major way in which carbon emissions will start to be cut world-wide. On its European neighbourhood policy, the EU is using its trade connections with other aspiring neighbourhood nations in the European, north African and near-eastern spheres. It has been reasonably successful in all those areas.
	Its largest success, however, is enlargement. One of my great loves is history. Look back to the 20th century, with the cost in lives and misery of crumbling empires; one-fifth of the population, 5 million people, disappeared through the dissolution of the Ottoman empire, of which 1.5 million were Armenians with 700,000 causalities in the First World War. The breakdown of that empire caused misery and genocide. The dissolution of our own empire inIndia and Pakistan saw causalities of 500,000 and12 million refugees. We have seen the same with the French empire in south-east Asia, with Vietnamand the self-genocide that latterly took place in Cambodia. The former Soviet empire, with the10 member states that moved into Europe and complied with the Copenhagen principles, has been a fantastic success for transition between non-democratic command economies and the security of the democratic, successful and growing market economies we have today.
	In the early days, Europe clearly failed in the former Yugoslavia, and particularly Bosnia. Even there, we have now managed to put our efforts into Bosnia and Macedonia much more effectively. We have perhaps made that situation more successful, but we still have some way to go with battle groups and rapid reaction forces.
	Where will it be important for Europe to go in the future? A number of areas have already been mentioned, and I will not go through them at any great length. Certainly, development is one. However large and effective we make European organisations such as FRONTEX, we will certainly not be able to contain the refugee problem in north Africa, and further east in Europe, unless we can allow and promote the development of those economies. On climate change, we will be unable to build our sea walls sufficiently unless we can further lead the world on emission reductions.
	Europe must also build up its military capability. Although France, Britain, Greece and Cyprus spend respectable proportions of their GDP on defence, that is certainly not the case for other member states. It is important that, while remaining close to the United States in NATO, Europe must build up its own independent capability for military action around the St Petersburg tasks. That is a priority for helping world order and projecting that greater power.
	Europe is no longer the shaper of the world that it was. The United States has been that for many decades; although it is perhaps losing the confidence of the world, as my noble friend Lord Dykes mentioned earlier. It is increasingly looking towards Asia rather than Europe for the future. The world deserves better than that. It deserves at least two major democratic blocks in geopolitics. The United States will, I hope, be joined by India as a future world power, but we must also be there. The noble Lord, Lord Bowness, pointed out that Europe can never be taken seriously when three delegates visit other nations for negotiations.
	Neither the management techniques in this communication nor the stronger global goals of the European Union will be fulfilled if Europe does not speak with one voice at member state level, particularly the EU three—Germany, France and the United Kingdom. We may have been successful; we shall have to see. It is not looking that good at the moment in the visits of foreign ministers to Tehran. For EU foreign policy to be a real success, we have to be united in visits to Washington, Baghdad and Beirut as well.

Lord Roper: My Lords, I speak as the current chairman of Sub-Committee C. I succeeded the noble Lord, Lord Bowness, last November, and I must begin by saying how much I appreciate the work that the sub-committee did, under his chairmanship, to produce the report that we are considering today. We have had a significant change in the membership of the committee, and we are grateful to members of the sub-committee who put in a serious amount of work in order to prepare this report. We appreciate the work that the noble Lord, Lord Bowness, did during his three years as chairman of Sub-Committee C, in the main European Union Committee, on which he still sits, and in his links with other foreign affairs and defence committees through the various groupings in which he has represented this House. He will be a difficult act to follow.
	The Commission paper to which this report refers was a response to one of the important developments of the British presidency during the second half of 2005: in the Hampton Court summit in October. I was in Berlin recently for a meeting called by the German foreign ministry to look at future developments of the European security and defence policy, and a number of references were made to the Hampton Court process. I was a little puzzled about what the Hampton Court process was; was it something to do with a maze or was it something else? In fact, the phrase "the Hampton Court process" is the taking forward of this set of relationships between the different pillars of the European Union. It was pleasing that the German foreign minister was able to refer to that as an important action that each presidency feels it has a responsibility to continue.
	The Commission document referred to increasing the coherence, effectiveness and visibility of the European Union in relation to the rest of the world. As my noble friend Lord Teverson said, at one level that is a technical and managerial matter. However, it is important to have the management working effectively if the resources that are made available to the European Union by our taxpayers are to be properly and usefully spent, and have the necessary effects to which he referred. It is sometimes said that one of the great strengths of the European Union in its relation to particular crises or more generally to other countries throughout the world is the range of instruments that it has available. Certain bodies have only a limited range of instruments, but the European Union has a particularly wide range, as was set out very clearly by the noble Lord, Lord Bowness, in his introduction.
	It has been interesting to see the remarkable development that has been made in the European security and defence policy in the relatively short period since the Nice Treaty in 2003 and the number of ESDP joint actions, not only in the Balkans, but in Africa and, until the end of last year, in Aceh in Asia. The European Union has experimented with a whole range of actions, some directly defence orientated, as was the force that went into the Congo to assist in peace-keeping for last year's elections. Others are police missions, as in Macedonia and now in Bosnia, and in other places advice on justice is given. The European Union has therefore been able to develop a number of important instruments in these areas. As of January this year, the EU has two battle groups available for deployment at relatively short notice.
	However, the problem which is taken up so clearly in this report is inter-pillar co-ordination—co-ordination between those activities which are the responsibility of the Commission and those activities which are the responsibility of the Council. That is seen very clearly in the discussion, which was an important part of this report, on so-called "double-hating"—that you will have in a country, as one has in Bosnia, a Commission representative responsible for all the economic activities and a European Union special representative responsible for political and security matters. They report back to different people in Brussels. That does not always mean particularly effective co-ordination.
	That is why, as the Committee's report points out, the experience in Macedonia is so important. For the first time, a single individual is the European Union's special representative as well as the Commission's representative, and has therefore been able to co-ordinate and make much more effective the impact of the European Union's activities in Macedonia. In the EU's preparation for the future deployment in Kosovo—assuming that agreement is reached onMr Ahtisaari's report on Kosovo—will the international civilian representative, who will bethe European Union's special representative under the present planning, also represent the Commission, or will there be a double-hating on that occasion? That would obviously be of considerable interest.
	I comment briefly on some of the points which have been made. I speak on behalf of the sub-committee because it has had a chance to considerthe Government's response to the report receivedat the end of last month. We are pleased thatthe Government have agreed or noted all the recommendations. They have taken a positive attitude, and, indeed, that is made clear by Mr Hoon in his covering letter to the formal response.
	As has already been said, there were two or three particular points on which we would like further consideration. The first point was referred to by the noble Lord, Lord Harrison. We recommended that encouragement should be given to Dr Solana, the high representative, to attend as often as possible the meetings of RELEX, the group of commissioners responsible for the external relations of the European Union. As the Government point out, that is not easy because of the amount of time that Dr Solana spends away from Brussels. None the less, I hope that despite what was said by the noble Lord, Lord Harrison, it will be possible for him to attend because, quite clearly, that is an important and practical level of co-operation.
	The second recommendation that we wish to watch and to continue to see develop is consular assistance. One is not talking about arrangements between different European Union member states to help each other's countries but whether it is appropriate for the EU Commission's representation in a member state to provide consular assistance. We believe that raises a number of important legal points and should be examined with a great deal of care. We thereforeagree with the Government that the situationshould continue to be watched, and if any proposals are brought forward by the Commission for consideration in that area the appropriate sub-committee of the European Union Committee will want to examine them with very great care.
	I was pleased that in his introduction, the noble Lord, Lord Bowness, referred to the presence of the high representative and the Commissioner for External Relations at the biennial meetings of COFAC; the meeting bringing together the foreign affairs chairmen of the national parliaments. Their presence gives a reality to those meetings and ensures that they are held to account by the national parliaments. That is important because, in these areas of intergovernmental co-operation, the national parliaments have particular responsibility.
	I conclude by once again thanking the noble Lord, Lord Bowness, for all that he has done. As we have learnt from the closing part of his speech, I am sure that he will maintain his active interest in these matters.

Lord Pearson of Rannoch: My Lords, I trust that your Lordships will welcome at least one contribution in this debate on Europe in the world from someone who wishes that the EU would live in the real world. If it did, it would drop all the ambitions contained in the report and dissolve itself into a free-trade area between consenting democracies as soon as possible, with foreign policy and defence left to those collaborating democracies.
	However, this is a deeply Euro-phile report which assumes that the EU should take on even more responsibility in the field of international affairs. I hope that your Lordships will not consider me too naughty if I say that that is not very surprising when one looks at the composition of the committee of your Lordships' House which compiled it, in which I fail to recognise a single declared Euro-sceptic. Quite a lot in the report coyly wonders whether the EU's recent communication and the proposals supported by the committee are in fact legal in the absence of the proposed EU constitution. I refer in particular to paragraphs 21, 22, 25, 35 and 138, which I do not have time to quote.
	My question for the Minister is, as usual, quite simple: what are the clauses in the existing treaty of Nice, being the legal basis for all EU activity, which justify the proposals that we are considering? I do not see them set out in the report.
	In anticipating the answer to that question, I remind the Minister of the written answers given by Mr Barosso, the President of the EU Commission,to Mr Daniel Hannan MEP on 20 March last year. Mr Hannan asked what were the legal bases for the European External Action Service and the European Defence Agency. Mr Barosso replied that,
	"provision is made for the setting up of the European External Action Service by Article III-296(3) of the Treaty establishing a Constitution for Europe".
	In other words, the External Action Service is justified only by the constitution, which does not exist. Therefore, it is illegal. Does the Minister agree? If not, why not?
	Mr Barosso went on to tell Mr Hannan in the same answer that the legal base for the European Defence Agency was Article 14 of the treaty establishingthe European Union. The Minister will know thatArticle 14 only allows the Council to adopt joint actions in specific situations, and does not empower an agency to act generally.
	Can the Minister enlighten us as to the legal bases in the treaty of Nice which justify the proposals in the report? I look forward to his reply and wish him well.

Lord Wallace of Saltaire: My Lords, I had rather feared that we might miss the contribution from the independence party to this debate, so I thank the noble Lord, Lord Pearson of Rannoch, for coming in. One could have an interesting debate about which world is real and which is the virtual Daily Mail world in which the independence party prefers to live, but perhaps we will leave that for another day. I am sure that we will have the opportunity to debate such issues time and again.
	I, too, compliment the noble Lord, Lord Bowness, on the report and say how well he chaired the committee. I know from visits to Brussels that reports from this sub-committee, as the others, are taken very seriously not only in the European institutions but within other Governments. I am glad that my noble friend Lord Roper has succeeded him. I have had the pleasure of working with John Roper since long before either of us thought that we would make the red Benches. We were members of staff at Chatham House together 20 years ago, and we worked on international and European issues for a long time.
	If the constitutional treaty had gone through, we would now have a European Union Foreign Minister and the EU External Action Service would begetting under way. That would have caused some complications, but there would have been certain economies. I recall that the first draft of the EU security strategy, which I am sure the noble Lord, Lord Pearson, read with great care, included a paragraph pointing out that the 15 member Governments of the European Union employed 35,000 diplomats. EU27 must now employ something in the order of 40,000. That paragraph was struck out of the final draft because a number of memberstates, including France, objected to what they sawas implicit criticism of maintaining national representations even though they duplicated one another's work.
	When I was in Beijing in November, I was grateful that the Irish ambassador invited me and one or two others to an evening at which we met the Commission representative and the ambassadors of half a dozen of the smaller member states. Every European Union member state has an embassy in Beijing, all of which are writing reports on political developments in China as well as promoting their separate trade interests. We had an extremely interesting discussion about whether they could justify their separate activities in political reporting and maintaining the specific Irish, Austrian, Slovenian or Danish political interest in relations with China.
	There is a great deal of duplication and, when the Comprehensive Spending Review hits the Foreign Office shortly and we have to cut the number of our embassies, the question will come up of how far it is practical and useful to combine further in third countries and to share with other European countries where we can. I am happy to say that the British Government have one of the best records in the European Union on this. I visited our embassy in Reykjavik, where the Germans have one side and we have the other, and we share security, transport and the conference room. I know that there are similar arrangements in east Africa and in central Asia, where the British have for extremely practical reasons gone in with the Germans, the Commission or other European countries. But in the states where we are not now represented, it would be helpful to have perhaps one British national in someone else's representation; it would be better than having no representation at all.
	Out in the field, we co-operate relatively easily. When I was in Tblisi two years ago, the British ambassador kindly took me to a briefing by the EU special representative—not double-hatted—for the south Caucasus, at which representatives of all the EU states that have embassies in Tblisi, of which there are a small number, met the Commission representative and the special representative. That makes a great deal of sense. I only hope that they wrote a single, joint report afterwards, to save time and to ensure that they had relatively common views. Such practical ways forward are very much in Britain's interest.
	The report talks about declining rivalries in Brussels. I welcome the evidence that the bureaucratic rivalries between the Commission and the Council are now in decline. I had a call three or four yearsago from a member of the External Relations Directorate-General of the Commission, who told me that papers were being written internally about the three Ps—in any competition between the growing Council secretariat and the European Commission, staff had to protect the powers and privileges of the Commission. There are still one or two echoes of that in the report, and I hope that the British Government do their best to criticise this when the Commission attempts to have extremely sharp elbows. The Council secretariat has grown remarkably and rapidly in the past 10 years. It has a military staff of over 200, and a foreign policy secretariat under Solana and others, and working together more closely, which includes much more extensive staff exchanges, is highly desirable.
	The Commission paper, for fairly obvious reasons, does not mention one of the problems that we have institutionally; namely, that there are too many commissioners, particularly those who deal with external relations. There are coy references to the Relex Group of commissioners. The relations between different commissioners concerned with different aspects of external relations are not always easy, but there are also national rivalries between national Governments and the European Union institutions, to which others have referred. How the European Union looks to its major partners is a real problem. I was invited to a joint conference and EU-Russia summit under the last Swedish presidency. I stood there watching the European Governments present their common view to the Russian Government. First we had Anna Lindh, the Swedish Foreign Minister, followed by Commissioner Patten and then Javier Solana. Standing behind them as they spoke, just to ensure that they were all there, were the 15 ambassadors to demonstrate that they were very much part of the same thing. I stood there thinking that, if I were a Russian, I would not take this seriously. I suspect that the Russians did not. The EU still does not have a common policy towards Russia, and desperately needs one.
	I am privileged to be leading a small group from this House to Russia next week, and I hope that we will hear from EU representations there that we are edging a little closer to a European Union common policy; we certainly need one. Practical co-operation on the ground, particularly in smaller states, is what we need next. I note the references in the report and in the paper to the experience of the Asian tsunami ina remote part of Indonesia and in southern Sri Lanka—areas in which one needed active and rapid responses and where representation from Britain and other EU states was thin. We certainly need less duplication of effort, and we need to ensure that small countries are better covered. Again, I should say in passing from my limited experience and observation, that the quality of Commission delegations in third countries is highly variable. Some are excellent, and some are not.
	There are tremendous advantages, which I hope the British Government are actively pursuing, in further staff exchanges not only from Whitehall but into Whitehall. It is very good to have more people from the Commission and from different countries working for some time in the Foreign Office. The British have an excellent record of being open to the nationals of other European Union states working in Whitehall—a record that is much better than the equivalent ones of our other European colleagues. I strongly hope that the British Government support the general double-hatting of EU special representatives. That is entirely desirable. I also hope that the Minister will be able to tell us that the British Government are now actively pursuing further progress in co-location.
	I shall make another couple of points about accountability and visibility before I conclude. Again, reading the report, it seems that it is practical and useful for the British Government to be more relaxed about the European Parliament's external relations committee being able to move beyond the strict competencies of the first pillar and to discuss someof the broader principles of external action and common foreign policy—it does not make sense to keep it in one box, spending rather too much time on little issues—and to encourage it to launch a broader debate on the principles of European Union foreign policy. The closer co-operation among chairmen of national parliamentary foreign affairs committeesis highly desirable; I hope that Her Majesty's Government strongly support that development.
	My biggest criticism of the Government comes from what is said in paragraphs 140 and 142 of the report, which refer to the inadequacies of,
	"the presentation of the EU's role in the world".
	It says:
	"The EU has substantial economic and political resources at its disposal, but its position on the world stage needs to be reinforced ... This cannot be done unless the Member States in particular publicly acknowledge what the EU is doing".
	Paragraph 142 says:
	"The United Kingdom Government should give a political lead by publicly recognising what the EU is doing in the field of external relations and in giving due credit to the EU for its successes".
	Far from being in the lead, the United Kingdom Government are a laggard on this. I hope that in a few months' time, under a different Prime Minister, we will at last have a Government who are prepared to stand up to the Murdoch press and to admit what we have achieved in Britain's interests through closer co-operation in foreign policy, defence policy and development policy in the European Union.

Lord Astor of Hever: My Lords, it has been an interesting debate, all the more so for the varied responses today. I thank my noble friend Lord Bowness for calling it. His expertise and experiencein European affairs and his work on countless committees in your Lordships' House have set a high standard. I have no doubt that the noble Lord, Lord Roper, will be a very distinguished successor. I thank also the committee for its hard work in bringing the report together.
	The content of the Commission's communication Europe in the World—Some Practical Proposals for Greater Coherence, Effectiveness and Visibility leaves much to be desired, yet it is hugely valuable to be given insight into the workings of the Commission. What appears important is how the European Union sees itself in the world. Ironically enough, both the Commission's communication and the report before us expose the unnecessary confusion of roles, particularly with respect to European security and defence policy. Although the EU has been expanding its role in the world for some time, operating European security and defence policy missions across the world, from the western Balkans to Aceh in Indonesia, those efforts have been undermined by duplication of effort and poor co-ordination. I was interested to read that the Commission acknowledged that, stating in its communication that,
	"the impact of EU's policy is weakened by a lack of focus and continuity in its external representation".
	That is a good reason why the European Union should not seek to supersede member states' foreign policy.
	There is clearly much scope for improving the internal management structures of the Commission and the Council and for better communication between the two bodies. We recognise fully the viability of the role that the EU can play in international terms; take, for example, the ongoing resistance to the proliferation of nuclear weapons, technology and material. Yet, the report makes it clear that internal decisions on nuclear proliferation have obstructed the flow of information and the pursuit of action.
	What must be avoided is attempting a united foreign policy merely for the sake of presenting a united front. Take, for example, the words of the Finnish president, who, after last summer's crisis in Lebanon, stated that action was difficult because there were,
	"real differences of opinion between Member States".
	It is right that, where there is agreement, member states should be able to enhance the impact of the united weight of their opinion by speaking with and through the EU. We would not deny that there has been success in the field. The EU intervention in Macedonia, mentioned by my noble friend and by the noble Lord, Lord Harrison, and others is a good example of where EU intervention can contribute to foreign policy where there is consensus between member states.
	Paragraph 36 of the report refers to the EU speaking with one voice, but at no point does it define the practical limits of its external activities. It must not be forgotten that those practical limits exist. The extent to which the EU can involve itself in foreign policy must be limited to the extent to which member states agree on any given point of that policy. There are and always will be real differences between member states. That is natural and must be respected. We believe that ultimate authority over foreign policy must remain with the member states seeking to find consensus—where there is none, it is not only a fruitless task but a wasteful one. My noble friend Lady Hooper mentioned the importance of the Assemblies of the Council of Europe and the WEU, and we should forget the important work thatthey do.
	This report turns the spotlight on the real impetus in Europe behind the so-called common foreign and security policy, which is referred to daily by EU Ministers and is an essential means of securing Europe's influence on the world stage. Indeed, we can see the inversion of the purposes of foreign policy no more clearly than in the EU's handling of Darfur. In a situation where NATO had already pledged to provide support for the African Union mission in Darfur, France, in the summer of 2005, insisted on parallel EU involvement. That resulted in a duplicating of resources and separate, simultaneous airlift operations and a period of distracting prevarication. What is more, the structure of EU foreign policy bodies duplicates NATO—the European Defence Agency, the EU Military Staff and the EU operational planning capability, to name but a few from a long list.
	We welcome the acknowledgement in the report that the current treaties are adequate and that a constitution is not required for the EU to act effectively. We actively encourage the EU in its work in the world, where that work is well placed, well considered and is achieved on the basis of real, not imagined, consensus. Yet, the proposals included in the Commission's suggestions all point to the same thing: the Commission is set on ushering in the constitution by the back door. While we do not object to double-hatting—for example, in the dual roleof High Representative and External Relations Commissioner—it is vital to preserve the existing, discrete boundaries within each of those roles. The High Representative must not, for example, become bound by the Commission, in his capacity as High Representative. The High Representative must have a mandate from member states. I would be grateful if the Minister could reassure the House that, in his capacity as attendee at, for example, the Relex group, the High Representative would be clearly briefed on his role and that there was no possibility of his taking on the mantle of, effectively, a European Foreign Minister.
	There is clearly a need for foreign relations to be more effectively and efficiently co-ordinated, and double-hatting might be the answer. However, this must be pursued with great care and reserve. The noble Lord, Lord Wallace of Saltaire, made some good points about the wisdom of this country sharing offices and staff with other members in some co-locations. Role sharing may be a way of improving the workings of the EU, but it is important that there are safeguards to protect the existing boundaries between the Commission and the Council.
	My honourable friend in another place, Graham Brady, asked the Minister whether Her Majesty's Government would make it clear to Chancellor Merkel that the EU constitution was not acceptable to Britain and that a referendum would have to be held on any new treaty containing significant elements of the constitution. The Minister rather skirted around the issue, and I would be grateful if he could give some firm answers to those questions today.
	We on these Benches believe in a positive vision of Europe, a Europe that is outward looking, not inwardly obsessed. Yet, while a consideration of Europe in the world is still fuelled by the importance of the cause of ever-closer union, I have little hope.I refer to the excellent summary by my right honourable friend William Hague in June of last year:
	"Those who wish the EU to supersede its Member States as a foreign policy actor have as their prime aim not the furthering of our common interest but the increase of the EU's power. Many of the advocates of that goal seem more interested in creating a counterweight to the United States than the propagation of our common values of freedom and democracy".
	The title of the Commission's communication on which the committee's report is based gives it all away. It is entitled "Some practical proposals for greater coherence, effectiveness and visibility". It is the latter aim among the three that concerns me. The EU should focus on transparency rather than visibility.

Lord Triesman: My Lords, like others I am grateful to the noble Lord, Lord Bowness, for his persuasive speech in opening the debate and the work of Sub-Committee C, as well as for his remarkable contribution over recent years to this work in your Lordships' House. I have read this report, as I have read others, with genuine enjoyment; it is provoking and makes us think about these issues. I also wish the noble Lord, Lord Roper, well in succeeding him. I am grateful to all noble Lords who have spoken.
	First let me set out a little context. The United Kingdom took the opportunity of its presidency of the European Union in the second half of 2005 to champion a more results-oriented Europe. It is well known that at the Hampton Court informal meeting we managed to get an agreement which resurrected the Lisbon agenda, focused on improving the EU's competitiveness. But what is less commented on is that we also managed to win approval for a programme that identified areas where the Council secretariat could co-ordinate more closely with the Commission in crisis management situations. The original Europe in the World Commission Communication, published in June 2006, followed in the results-oriented logic of the Hampton Court agenda, but it focused not only on the Commission and Council secretariat but also on the high representative and the presidency of the European Union, the European Parliament and the member states.
	As the Foreign Secretary and the Minister for Europe have made clear in another place and in correspondence, we have consistently been supportive of this work. It rightly does not anticipate a constitutional treaty but is predicated on practical reforms that are possible under current treaties. It also focuses on amending existing arrangements rather than establishing new processes. Indeed, as the committee identified in its report, much of whatwas set out in the Commission's communicationwas happening already at the working level. As the Government stated in their official response to the committee's report, this useful work will continue to be taken forward by the German presidency and the Commission, and we will continue to support it fully. That does not and will not usher in the constitution by covert means—a point which I think has been put to me; I am clear on that—and there is no change on the referendum position.
	The noble Lord, Lord Astor, made several points here. I do not believe either that there is a case for superseding our own foreign policy objectives. Were foreign policy always to be the outcome of long periods of gestation, perhaps in theory it might be possible to reach unanimity across a body as diverse as the European Union, but the world does not generally permit that, or at least it happens only occasionally. On most issues, ultimate authority is bound to remain in sovereign state hands for most issues.
	Perhaps I may deal with the issues addressed in the report. The call for improved co-operation and coherence in EU external relations must certainly be welcomed, and the Hampton Court agenda focuses on exactly that as well as on effective delivery. I welcome it again today. I also welcome what is saidon strategic planning. The Government think it isa valuable proposal. Although not much is saidin the concluding statement about the strategic perspective—which suggests to me that there is a good deal more work to do on it—there is a general goodwill to take it forward. I make that point to the noble Lords, Lord Bowness and Lord Dykes, who specifically raised the problem. There is no need for member states to say much more about the good sense of it because it is so self-evidently sensible to have a strong strategy.
	We are agreed about co-operation between the high representative and the Commission. I agree also with the noble Lord, Lord Wallace, that the meetings of chairs of foreign affairs committees is a useful innovation which should be used to its fullest. The Government believe that the high representative should take part in such meetings when he can. But I am keen that this should be a practical observation. I know that Javier Solana has played a vital role in many international negotiations—indeed, I have had the privilege of being present at a number of them—and I would deeply like to see him in Africa, in Kosovo, in parts of Latin America and elsewhere because of the value he can add to such negotiations. So there has to be a practical outcome. My noble friend Lord Harrison made the point that we need to see him but also that he is most effective when he is abroad, a point shared by the noble Lord, Lord Roper.
	We believe that co-operation between Counciland Commission officials requires closer working relationships but there are already many good examples of it in practice upon which we can draw. We have made it clear that we are in favour of joint papers for discussion. Where such joint papers can be created—and, again, there have been a number of them—they are a reflection of good consensus. Often there are not joint papers because there has not been enough consensus to generate them. One has to be realistic about that.
	My noble friend Lord Harrison asked about information exchange. The Government have said—not half-heartedly—that certain distinct roles limit the way in which reports are prepared. The fact that there are functionally distinct roles will on occasions mean there will have to be some degree of separation.
	On EU participation in multilateral organisations, there is no difference between the committee andthe Government about the importance of the EU preparing well for multinational meetings because the world looks to the EU for as much coherence as can be achieved on such occasions. I also share the view that, although we cannot say a great deal about the euro-zone for obvious reasons—my noble friend Lord Harrison pushed me on this point—certain treaty obligations involve us and require of us a view.
	The noble Lord, Lord Dykes, and other noble Lords raised the issue of double-hatting. There is a need for a case-by-case analysis of what will work to the greatest possible effect. Probably no one model would work completely. Whether or not this causes some regret, in my view the prospect for double-hatting in Kosovo is distant; I do not believe it will happen immediately. It is probably several years away because the international community will have to stay in Kosovo for a while and there are different roles and functions to be fulfilled there.
	Co-operation between the Commission and the Council is obviously extremely important. This is another area where there has been a good deal of co-operation and where pragmatic judgments have led everyone to conclude that it is worth proceeding in this way. I have absolutely no doubt that we can do so within the framework of existing treaties without having to invent other arrangements. I shall return to the point of the noble Lord, Lord Pearson, in more specific detail in due course.
	As the Minister also responsible for consular assistance, I am wholly with the noble Lord, Lord Roper, on his analysis of the issue. I say to my noble friend Lord Harrison that I am afraid it requires that we take our responsibilities under treaties in a way that does not readily permit the involvement of the Commission. I can say that, from some of the tougher areas of consular work, I would not want us tobe held up by having to develop other kinds of arrangements when the task is helping British citizens who are in significant difficulty abroad. We can act as other countries act on behalf of their citizens.
	There has been a good deal of sharing, none the less. I saw it in the evacuation from Beirut, a huge operation by any standards. I was always delighted when we could achieve that. Sub-Committee C mentions that premises and support services should be shared on a case-by-case basis, as has been put to me by the noble Lord, Lord Wallace, and my noble friend Lord Harrison, and there are many examples of that working. I do not think there will be a lot of new build of joint embassies and facilities from the current financial perspective, much as I might wish it to be otherwise. There are also occasions when people are not desperately keen to do this because various countries have different views about the level of security, for example, or about the way they want to present themselves through their missions. We all have to make our judgments on that. Occasionally, though, sharing buildings, security or basic facilities can improve the security of our missions when they are serving abroad. That can make it a much easier task for those missions to do what we need them to do, without having to be distracted by the needs that unfortunately press in around areas like security.
	The staff exchange programme is a good initiative, and we will certainly be closely involved in it. I think all member states have secondees at both the Commission and the Council but, Brussels being Brussels, I am not able to tell your Lordships' House how many of them there are or where they are. Still, when you go there, you see them. I can tell you about our country, where we do keep the information. We already have secondees from member states—

Lord Pearson of Rannoch: My Lords, I hope the Minister will forgive me, but why can he not tell us how many secondees there are?

Lord Triesman: My Lords, I cannot tell the House because Brussels does not keep the statistics—exactly the reason I gave less than 20 seconds ago. I do not think it has changed in that period. I can tell your Lordships that we had 13 secondees at senior levels in the FCO during our presidency, and we want to continue that pattern.
	We will want to take forward, as the noble Lords, Lord Bowness and Lord Roper, have said today, relations with the European and national parliaments. There is a good deal of work to be done, and nolack of enthusiasm about doing that. In our view, commissioners should most certainly make that one of the priorities. If there is to be a meaningful democratic process in any parliament, it must be one where the information provided comes from those people who carry the major responsibilities for the work.
	As for public support, the noble Lord, Lord Teverson, has made a strong case for making sure that people know of the EU's achievements, many of which he has set out. I agree with him about them. The noble Lord, Lord Wallace, has suggested that perhaps we have not taken as leading a role as we could. The Committee was more generous to us in recognising what we have done, and I appreciate that. I do not believe we are wanting in that area, and if anyone believed that others are much more forward, they would have to give me an account that I could understand of why, despite France and the Netherlands being so forward on this issue, their referendums turned out as they did. Engaging public support is critical for any political institution. We agree with the general force of the argument put forward by the sub-committee.
	In this debate the noble Lord, Lord Bowness, has led the way in valuing the EU's work, as have the noble Lord, Lord Teverson, and others. I follow in their footsteps for a few moments. The external policies of the EU have seen considerable successes, which have come generally from closer co-ordination, the subject of this debate. In my view they all need to meet a test that I have put to the House before; namely, that we should say, when we do things: does closer co-ordination add value to what we are doing, or does it not? There are pragmatic judgments about that. There is a world role in doing these thingswell, as the noble Lord, Lord Teverson, said. He mentioned trade and soft power, and the noble Lord, Lord Roper, said—and I agree with him—that we can achieve that; it helps weld the pillars together and make more sense of the work overall.
	I would like to comment on the common foreign and security policy. Through the EU common positions, one aspect of the CFSP which we are able to say to third states—be it the Zimbabwean regime, the Governments of Iran, Sudan or Belarus—is that all 27 states of the European Union share a common view of their behaviour. Thus our messages, and sometimes the demands we make, carry much greater weight. But the CFSP, as many of your Lordships will know, is more than just a declaratory tool. We currently have nine European security and defence policy missions deployed outside the Union; these include peacekeepers, military observers, police mentors in Bosnia—some of the areas that the noble Lord, Lord Roper, mentioned—work in Sudan and the Democratic Republic of Congo. We have border monitors and police mentors in Gaza; we are training the Iraqi Justice Ministry officials. In addition, this year we will see the deployment of two new civilian missions to Kosovo and Afghanistan to focus on rule of law issues.
	There is hard evidence that these policies are delivering for the EU, but they are also delivering for the United Kingdom. Those are just as much our objectives—as, indeed, are the EU's significant external financial instruments. There again, we see how co-operation delivers for both the EU and the UK. To an extent, all these instruments do what it says on the tin. Across the world, they are focused on three core political objectives: to provide stability, security and prosperity in the EU's neighbourhood; to support sustainable development at an international level; and to promote responsible political governance and global stability. Those objectives are why people wish to join an enlarging EU. It drives those values right through the countries that prepare for membership and then join. Enlargement must be one of the most satisfactory outcomes in the progress towards a peaceful continent that probably any of us have seen in our lifetime. I will say no more about enlargement because of time, but I believe that it is fundamental to our objectives.
	I will in a moment please or upset the noble Lord, Lord Pearson, with my response to his points. My noble friend Lord Harrison mentioned the need for greater depth in European experience and referred to the Prime Minister's speech. I think the Prime Minister was making the point that we need balances between our key alliances; Europe has to play a real role in those balances. The noble Lord, Lord Dykes, also set out the importance of European roles, aside from, but preferably not in conflict with, the United States.
	The noble Baroness, Lady Hooper, is right to remind us of the other institutions in Europe and the need to work closely with them to avoid too much duplication. But it is true that in the Council of Europe—which reaches far further, to 46 states—there are areas in which very real achievements can be had by making sure that that work continues successfully. I am wholly with the noble Baroness on that point.
	I hope that the noble Lord, Lord Pearson, will not mind my saying that I feel as though we have been round this circuit more than a few times. I do not accept that there will be a successful Europe which is based only on a set of trading relationships, with no social dimension and no other cohesion involved. It is hard to think of an example in world history that has achieved that. Mostly obligations to one another so that one can live in a civilised way with one another are part of the objective. I hear what the noble Lord says about Mr Barroso and the treaty of Nice, but I think I can summarise the point in the way that Professor Alan Dashwood did in the evidence he gave the committee, when he said that there was no legal impediment to the creation of an external action service. This is a reference to the Commission staff and the Council secretariat working together, often informally, but much more closely and to greater effect. I repeat the point that I have made in answers to the noble Lord before. A formal European external action service, such as the one defined in the constitutional treaty, with a legally defined role, will need a treaty base that it does not currently have. Whatever is said by anyone else, that is our view.
	It has been a very important and useful debate. Of course, it would be great, as the noble Lord, Lord Wallace, says, to have more common policy when, for example, we meet the Russians, but the immediate history of all 27 nations and their relations with Russia in its former Soviet Union mode shows that it will be some time before we will get to that point. It is work in progress, as is evident when you talk to the representatives of those countries.
	However we look at it—whether we think that the progress is fast enough or not—this debate has demonstrated that European Union Sub-Committee C has produced an excellent report that focuses on how we can be more effective in some of the areas that are vital to the United Kingdom. They are important for the EU but much more vital for the United Kingdom. We will keep the House informed of developments in that area through regular contact and correspondence with the European Union Select Committee and in the debates that we have among your Lordships.

Lord Bowness: My Lords, I thank all noble Lords for their contributions and presence this afternoon. In closing, I underline the fact that the common foreign and security policy and ESDP already exist in the treaties. The Commission's paper made it clear that it was not reopening the debate on the constitutional treaty and was looking at how to enhance the implementation of policies under the existing treaties. That was how the committee viewed the Commission proposal and the committee was largely supportive of those proposals in that context. I accept that there may well be, as my noble friend Lord Astor of Hever said, practical limits to achieving a common foreign policy in every case, but we should take every opportunity to enhance the prospect of achieving the consensus to which the noble Lord referred where it is possible—and where it is possible to find it we need effective means of implementing and projecting it throughout the world. That is in our interests and the interests of the European Union.
	Lastly, I thank all noble Lords for their kind remarks to me personally as chairman of the sub-committee and I wish every success to the noble Lord, Lord Roper, and the new sub-committee, as well as its new clerk, Kathryn Colvin.

On Question, Motion agreed to.
	House adjourned at 4.48 pm